This article will reflect on the compensation paid to Christian Hogg who has served as CEO of Hutchison China MediTech Limited (LON:HCM) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Hutchison China MediTech.
How Does Total Compensation For Christian Hogg Compare With Other Companies In The Industry?
According to our data, Hutchison China MediTech Limited has a market capitalization of UK£3.4b, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. We note that's an increase of 8.4% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$375k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£1.5b and UK£4.9b had a median total CEO compensation of US$1.4m. This suggests that Hutchison China MediTech remunerates its CEO largely in line with the industry average. What's more, Christian Hogg holds UK£53m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 35% of total compensation represents salary and 65% is other remuneration. In Hutchison China MediTech's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Hutchison China MediTech Limited's Growth
Over the last three years, Hutchison China MediTech Limited has shrunk its earnings per share by 57% per year. It saw its revenue drop 2.1% over the last year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Hutchison China MediTech Limited Been A Good Investment?
Hutchison China MediTech Limited has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we noted earlier, Hutchison China MediTech pays its CEO in line with similar-sized companies belonging to the same industry. According to our analysis, Hutchison China MediTech is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is largely in line with the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Hutchison China MediTech that investors should look into moving forward.
Important note: Hutchison China MediTech is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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