In 2017 Xue Lin was appointed CEO of Sing Lee Software (Group) Limited (HKG:8076). 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Xue Lin’s Compensation Compare With Similar Sized Companies?
Our data indicates that Sing Lee Software (Group) Limited is worth HK$227m, and total annual CEO compensation was reported as CN¥703k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CN¥520k. We took a group of companies with market capitalizations below CN¥1.4b, and calculated the median CEO total compensation to be CN¥1.5m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Sing Lee Software (Group) has changed over time.
Is Sing Lee Software (Group) Limited Growing?
On average over the last three years, Sing Lee Software (Group) Limited has grown earnings per share (EPS) by 68% each year (using a line of best fit). It achieved revenue growth of 44% over the last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Sing Lee Software (Group) Limited Been A Good Investment?
Since shareholders would have lost about 9.3% over three years, some Sing Lee Software (Group) Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
Sing Lee Software (Group) Limited is currently paying its CEO below what is normal for companies of its size.
Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company’s performance over the last three years. We’re not critical of the remuneration Xue Lin receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Sing Lee Software (Group).
Important note: Sing Lee Software (Group) 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.
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