How Should Investors React To Beijing North Star Company Limited's (HKG:588) CEO Pay?

Wei-Dong Li became the CEO of Beijing North Star Company Limited (HKG:588) 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. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Beijing North Star

How Does Wei-Dong Li's Compensation Compare With Similar Sized Companies?

According to our data, Beijing North Star Company Limited has a market capitalization of HK$9.0b, and paid its CEO total annual compensation worth CN¥775k over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CN¥665k. When we examined a selection of companies with market caps ranging from CN¥2.8b to CN¥11b, we found the median CEO total compensation was CN¥3.5m.

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 72% of total compensation represents salary, while the remainder of 28% is other remuneration. Beijing North Star is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at Beijing North Star, below.

Is Beijing North Star Company Limited Growing?

Beijing North Star Company Limited has seen earnings per share (EPS) move positively by an average of 34% a year, over the last three years (using a line of best fit). Its revenue is up 7.4% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Beijing North Star Company Limited Been A Good Investment?

Since shareholders would have lost about 37% over three years, some Beijing North Star Company Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Beijing North Star Company Limited remunerates its CEO below most similar sized companies.

Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. We're not critical of the remuneration Wei-Dong Li receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for Beijing North Star (1 is a bit unpleasant!) that you should be aware of before investing here.

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

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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