Does China Wood Optimization (Holding) Limited's (HKG:1885) CEO Pay Matter?
Li Li has been the CEO of China Wood Optimization (Holding) Limited (HKG:1885) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for China Wood Optimization (Holding)
How Does Li Li's Compensation Compare With Similar Sized Companies?
Our data indicates that China Wood Optimization (Holding) Limited is worth HK$2.0b, and total annual CEO compensation was reported as CN¥711k for the year to December 2018. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥708m to CN¥2.8b. The median total CEO compensation was CN¥2.1m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Readers will want to know that China Wood Optimization (Holding) pays a modest slice of remuneration through salary, as compared to the wider sector.
Most shareholders would consider it a positive that Li Li takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at China Wood Optimization (Holding) has changed from year to year.
Is China Wood Optimization (Holding) Limited Growing?
On average over the last three years, China Wood Optimization (Holding) Limited has seen earnings per share (EPS) move in a favourable direction by 5.8% each year (using a line of best fit). Its revenue is down 15% over last year.
I generally like to see a little revenue growth, but it is good to see EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but 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 Wood Optimization (Holding) Limited Been A Good Investment?
With a three year total loss of 9.5%, China Wood Optimization (Holding) Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
China Wood Optimization (Holding) Limited is currently paying its CEO below what is normal for companies of its size.
It's well worth noting that while Li Li is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. Many shareholders would probably like to see improvements, but our analysis does not suggest that CEO compensation is too generous. Looking into other areas, we've picked out 1 warning sign for China Wood Optimization (Holding) that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than China Wood Optimization (Holding), this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
