Is Best Pacific International Holdings Limited (HKG:2111) Overpaying Its CEO?

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The CEO of Best Pacific International Holdings Limited (HKG:2111) is Haitao Zhang. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Best Pacific International Holdings

How Does Haitao Zhang's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Best Pacific International Holdings Limited has a market cap of HK$2.8b, and is paying total annual CEO compensation of HK$3.9m. (This is based on the year to December 2018). That's a fairly small increase of 0.5% on year before. It is worth noting that the CEO compensation consists almost entirely of the salary, worth HK$3.9m. When we examined a selection of companies with market caps ranging from HK$1.6b to HK$6.2b, we found the median CEO total compensation was HK$2.3m.

Thus we can conclude that Haitao Zhang receives more in total compensation than the median of a group of companies in the same market, and of similar size to Best Pacific International Holdings Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Best Pacific International Holdings has changed from year to year.

SEHK:2111 CEO Compensation, July 1st 2019
SEHK:2111 CEO Compensation, July 1st 2019

Is Best Pacific International Holdings Limited Growing?

Best Pacific International Holdings Limited has reduced its earnings per share by an average of 14% a year, over the last three years (measured with a line of best fit). Its revenue is up 15% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Best Pacific International Holdings Limited Been A Good Investment?

Since shareholders would have lost about 50% over three years, some Best Pacific International Holdings Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Best Pacific International Holdings Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Best Pacific International Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than Best Pacific International Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.

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