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Is China New City Commercial Development Limited (HKG:1321) Overpaying Its CEO?

Simply Wall St

Shuixiao Dong has been the CEO of China New City Commercial Development Limited (HKG:1321) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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 China New City Commercial Development

How Does Shuixiao Dong's Compensation Compare With Similar Sized Companies?

According to our data, China New City Commercial Development Limited has a market capitalization of HK$2.0b, and paid its CEO total annual compensation worth CN¥689k over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥540k. When we examined a selection of companies with market caps ranging from CN¥700m to CN¥2.8b, we found the median CEO total compensation was CN¥2.0m.

Most shareholders would consider it a positive that Shuixiao Dong takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at China New City Commercial Development has changed from year to year.

SEHK:1321 CEO Compensation, February 20th 2020

Is China New City Commercial Development Limited Growing?

On average over the last three years, China New City Commercial Development Limited has shrunk earnings per share by 83% each year (measured with a line of best fit). In the last year, its revenue is up 206%.

Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China New City Commercial Development Limited Been A Good Investment?

With a three year total loss of 48%, China New City Commercial Development Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It looks like China New City Commercial Development Limited pays its CEO less than similar sized companies.

It's well worth noting that while Shuixiao Dong is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. I am not concerned by the CEO compensation, but it would be good to see improved performance before pay increases. Shareholders may want to check for free if China New City Commercial Development insiders are buying or selling shares.

Important note: China New City Commercial Development 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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