Why Chongqing Rural Commercial Bank Co., Ltd.'s (HKG:3618) CEO Pay Matters To You

The CEO of Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618) is Wenhui Xie. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Chongqing Rural Commercial Bank

How Does Wenhui Xie's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Chongqing Rural Commercial Bank Co., Ltd. has a market cap of HK$60b, and reported total annual CEO compensation of CN¥908k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CN¥815k. When we examined a selection of companies with market caps ranging from CN¥28b to CN¥85b, we found the median CEO total compensation was CN¥5.1m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Chongqing Rural Commercial Bank pays out 90% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see a visual representation of the CEO compensation at Chongqing Rural Commercial Bank, below.

Is Chongqing Rural Commercial Bank Co., Ltd. Growing?

Over the last three years Chongqing Rural Commercial Bank Co., Ltd. has seen earnings per share (EPS) move in a positive direction by an average of 3.2% per year (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. Considering these factors I'd say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.

Has Chongqing Rural Commercial Bank Co., Ltd. Been A Good Investment?

With a three year total loss of 31%, Chongqing Rural Commercial Bank Co., Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Chongqing Rural Commercial Bank Co., Ltd. remunerates its CEO below most similar sized companies.

Wenhui Xie receives relatively low remuneration compared to similar sized companies. But the company isn't exactly firing on all cylinders, and returns over three years are not good. Many shareholders would probably like to see improvements, but our analysis does not suggest that CEO compensation is too generous. CEO compensation is an important area to keep your eyes on, but we've also identified 4 warning signs for Chongqing Rural Commercial Bank (1 is concerning!) that you should be aware of before investing here.

Important note: Chongqing Rural Commercial Bank 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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