How Should Investors React To Wuxi Sunlit Science and Technology Company Limited’s (HKG:1289) CEO Pay?

Deqiang Zhang became the CEO of Wuxi Sunlit Science and Technology Company Limited (HKG:1289) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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 Wuxi Sunlit Science and Technology

How Does Deqiang Zhang’s Compensation Compare With Similar Sized Companies?

Our data indicates that Wuxi Sunlit Science and Technology Company Limited is worth HK$140m, and total annual CEO compensation was reported as CN¥583k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CN¥450k. We took a group of companies with market capitalizations below CN¥1.4b, and calculated the median CEO total compensation to be CN¥1.6m.

A first glance this seems like a real positive for shareholders, since Deqiang Zhang is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Wuxi Sunlit Science and Technology, below.

SEHK:1289 CEO Compensation, February 17th 2020
SEHK:1289 CEO Compensation, February 17th 2020

Is Wuxi Sunlit Science and Technology Company Limited Growing?

Wuxi Sunlit Science and Technology Company Limited has increased its earnings per share (EPS) by an average of 35% a year, over the last three years (using a line of best fit). It saw its revenue drop 48% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don’t have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Wuxi Sunlit Science and Technology Company Limited Been A Good Investment?

Since shareholders would have lost about 69% over three years, some Wuxi Sunlit Science and Technology Company Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like Wuxi Sunlit Science and Technology Company Limited pays its CEO less than similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. 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 Deqiang Zhang receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Wuxi Sunlit Science and Technology.

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.

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.

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. Thank you for reading.