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Does Hutchison China MediTech Limited's (LON:HCM) CEO Pay Compare Well With Peers?

Simply Wall St

In 2006 Christian Hogg was appointed CEO of Hutchison China MediTech Limited (LON:HCM). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Hutchison China MediTech

How Does Christian Hogg's Compensation Compare With Similar Sized Companies?

According to our data, Hutchison China MediTech Limited has a market capitalization of UK£2.3b, and pays its CEO total annual compensation worth US$1.3m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$365k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$2.3m.

A first glance this seems like a real positive for shareholders, since Christian Hogg is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Hutchison China MediTech has changed over time.

AIM:HCM CEO Compensation, August 26th 2019

Is Hutchison China MediTech Limited Growing?

Hutchison China MediTech Limited has reduced its earnings per share by an average of 98% a year, over the last three years (measured with a line of best fit). Its revenue is down -1.2% over last year.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Hutchison China MediTech Limited Been A Good Investment?

I think that the total shareholder return of 95%, over three years, would leave most Hutchison China MediTech Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Hutchison China MediTech Limited is currently paying its CEO below what is normal for companies of its size.

Christian Hogg is paid less than CEOs of similar size companies. While the company isn't growing on our analysis, shareholder returns have been good in recent years. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. Shareholders may want to check for free if Hutchison China MediTech insiders are buying or selling shares.

Important note: Hutchison China MediTech 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.

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.