Wei Zhang has been the CEO of Capital Finance Holdings Limited (HKG:8239) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Wei Zhang’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Capital Finance Holdings Limited has a market cap of HK$110m, and reported total annual CEO compensation of HK$2.9m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$1.9m. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.8m.
It would therefore appear that Capital Finance Holdings Limited pays Wei Zhang more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Capital Finance Holdings has changed over time.
Is Capital Finance Holdings Limited Growing?
On average over the last three years, Capital Finance Holdings Limited has grown earnings per share (EPS) by 55% each year (using a line of best fit). It saw its revenue drop 30% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. 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 Capital Finance Holdings Limited Been A Good Investment?
With a three year total loss of 65%, Capital Finance Holdings Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Capital Finance Holdings Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. On another note, we’ve spotted 3 warning signs for Capital Finance Holdings that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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