Here's What We Learned About The CEO Pay At Zhejiang Shibao Company Limited (HKG:1057)

Bao Yi Zhang became the CEO of Zhejiang Shibao Company Limited (HKG:1057) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Zhejiang Shibao pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Zhejiang Shibao

Comparing Zhejiang Shibao Company Limited's CEO Compensation With the industry

According to our data, Zhejiang Shibao Company Limited has a market capitalization of HK$4.1b, and paid its CEO total annual compensation worth CN¥637k over the year to December 2019. That's a notable increase of 9.5% on last year. We note that the salary portion, which stands at CN¥558.5k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was CN¥1.8m. Accordingly, Zhejiang Shibao pays its CEO under the industry median.

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. According to our research, Zhejiang Shibao has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Zhejiang Shibao Company Limited's Growth

Over the last three years, Zhejiang Shibao Company Limited has shrunk its earnings per share by 116% per year. In the last year, its revenue is up 17%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Zhejiang Shibao Company Limited Been A Good Investment?

Since shareholders would have lost about 65% over three years, some Zhejiang Shibao Company Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Bao Yi is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But poor shareholder returns EPS growth have hampered the company over the past three years. In contrast, revenues have increased more recently. Although it's fair to say CEO compensation is modest, shareholders might want to see healthier investor returns before thinking Bao Yi deserves a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Zhejiang Shibao that investors should think about before committing capital to this stock.

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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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