Is China Aluminum Cans Holdings Limited's (HKG:6898) CEO Pay Justified?

The CEO of China Aluminum Cans Holdings Limited (HKG:6898) is Wan Tsang Lin. 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 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.

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See our latest analysis for China Aluminum Cans Holdings

How Does Wan Tsang Lin's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that China Aluminum Cans Holdings Limited has a market cap of HK$1.0b, and is paying total annual CEO compensation of HK$3.6m. (This number is for the twelve months until December 2018). That's just a smallish increase of 2.6% on last year. We think total compensation is more important but we note that the CEO salary is lower, at HK$543k. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.5m.

Thus we can conclude that Wan Tsang Lin receives more in total compensation than the median of a group of companies in the same market, and of similar size to China Aluminum Cans 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.

You can see, below, how CEO compensation at China Aluminum Cans Holdings has changed over time.

Is China Aluminum Cans Holdings Limited Growing?

China Aluminum Cans Holdings Limited has reduced its earnings per share by an average of 25% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 14% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has China Aluminum Cans Holdings Limited Been A Good Investment?

Given the total loss of 6.0% over three years, many shareholders in China Aluminum Cans Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by China Aluminum Cans Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if China Aluminum Cans Holdings insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.