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Is China Investments Holdings Limited's (HKG:132) CEO Being Overpaid?

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Pingwu Lin became the CEO of China Investments Holdings Limited (HKG:132) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for China Investments Holdings

How Does Pingwu Lin’s Compensation Compare With Similar Sized Companies?

Our data indicates that China Investments Holdings Limited is worth HK$365m, and total annual CEO compensation was reported as HK$1.7m for the year to December 2019. That’s less than last year. We think total compensation is more important but we note that the CEO salary is lower, at HK$600k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.8m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of China Investments Holdings. Speaking on an industry level, we can see that nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. China Investments Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry.

That means Pingwu Lin receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at China Investments Holdings has changed from year to year.

SEHK:132 CEO Compensation May 23rd 2020

Is China Investments Holdings Limited Growing?

Over the last three years China Investments Holdings Limited has seen earnings per share (EPS) move in a positive direction by an average of 75% per year (using a line of best fit). Its revenue is up 103% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has China Investments Holdings Limited Been A Good Investment?

With a three year total loss of 69%, China Investments Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

Remuneration for Pingwu Lin is close enough to the median pay for a CEO of a similar sized company .

We think that the EPS growth is very pleasing, but it’s disappointing to see negative shareholder returns over three years. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. Shifting gears from CEO pay for a second, we’ve spotted 5 warning signs for China Investments Holdings you should be aware of, and 3 of them are potentially serious.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.