Yahoo Finance Should You Worry About Hutchison China MediTech Limited's (LON:HCM) CEO Pay?
Christian Hogg became the CEO of Hutchison China MediTech Limited (LON:HCM) in 2006. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out 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 paid its CEO total annual compensation worth US$1.4m over the year to December 2019. Notably, that's an increase of 8.4% over the year before. While we always look at total compensation first, we note that the salary component is less, at US$375k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$2.4m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Hutchison China MediTech. Speaking on an industry level, we can see that nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Hutchison China MediTech, in sharp contrast to the overall sector.
Most shareholders would consider it a positive that Christian Hogg 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 Hutchison China MediTech has changed from year to year.
Is Hutchison China MediTech Limited Growing?
Over the last three years Hutchison China MediTech Limited has shrunk its earnings per share by an average of 82% per year (measured with a line of best fit). In the last year, its revenue is down 4.3%.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Hutchison China MediTech Limited Been A Good Investment?
Hutchison China MediTech Limited has not done too badly by shareholders, with a total return of 8.4%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
It appears that Hutchison China MediTech Limited remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Christian Hogg is under the median of a group of similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Hutchison China MediTech that investors should be aware of in a dynamic business environment.
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.
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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