Does China Resources Beer (Holdings) Company Limited's (HKG:291) CEO Pay Matter?

Xiaohai Hou became the CEO of China Resources Beer (Holdings) Company Limited (HKG:291) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. 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.

Check out our latest analysis for China Resources Beer (Holdings)

How Does Xiaohai Hou's Compensation Compare With Similar Sized Companies?

According to our data, China Resources Beer (Holdings) Company Limited has a market capitalization of HK$124b, and paid its CEO total annual compensation worth CN¥3.9m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥1.5m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over CN¥55b and the median CEO total compensation was CN¥6.5m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Most shareholders would consider it a positive that Xiaohai Hou takes less in total compensation than the CEOs of most other large 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 Resources Beer (Holdings) has changed from year to year.

Is China Resources Beer (Holdings) Company Limited Growing?

Over the last three years China Resources Beer (Holdings) Company Limited has grown its earnings per share (EPS) by an average of 9.4% per year (using a line of best fit). Its revenue is up 5.1% over last year.

I'd prefer higher revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. It could be important to check this free visual depiction of what analysts expect for the future.

Has China Resources Beer (Holdings) Company Limited Been A Good Investment?

I think that the total shareholder return of 147%, over three years, would leave most China Resources Beer (Holdings) Company Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like China Resources Beer (Holdings) Company Limited pays its CEO less than the average at large companies.

It's well worth noting that while Xiaohai Hou is paid below what is normal at large companies, the returns have been very pleasing, over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling China Resources Beer (Holdings) (free visualization of insider trades).

Important note: China Resources Beer (Holdings) may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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