Here's Why We Think Precision Tsugami (China) Corporation Limited's (HKG:1651) CEO Compensation Looks Fair for the time being

Key Insights

• Precision Tsugami (China)'s Annual General Meeting to take place on 19th of August
• Salary of CN¥3.60m is part of CEO Tang Donglei's total remuneration
• The overall pay is comparable to the industry average
• Precision Tsugami (China)'s total shareholder return over the past three years was 14% while its EPS grew by 7.0% over the past three years

Under the guidance of CEO Tang Donglei, Precision Tsugami (China) Corporation Limited (HKG:1651) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 19th of August. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Precision Tsugami (China)

Comparing Precision Tsugami (China) Corporation Limited's CEO Compensation With The Industry

Our data indicates that Precision Tsugami (China) Corporation Limited has a market capitalization of HK$3.7b, and total annual CEO compensation was reported as CN¥3.6m for the year to March 2024. This means that the compensation hasn't changed much from last year. In particular, the salary of CN¥3.60m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Machinery industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of CN¥3.6m. From this we gather that Tang Donglei is paid around the median for CEOs in the industry. Moreover, Tang Donglei also holds HK$1.5m worth of Precision Tsugami (China) stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	CN¥3.6m	CN¥3.6m	99%
Other	CN¥27k	-	1%
Total Compensation	CN¥3.6m	CN¥3.6m	100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Investors will find it interesting that Precision Tsugami (China) pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Precision Tsugami (China) Corporation Limited's Growth

Precision Tsugami (China) Corporation Limited has seen its earnings per share (EPS) increase by 7.0% a year over the past three years. It saw its revenue drop 23% over the last year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Precision Tsugami (China) Corporation Limited Been A Good Investment?

With a total shareholder return of 14% over three years, Precision Tsugami (China) Corporation Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Tang receives almost all of their compensation through a salary. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Precision Tsugami (China) that investors should think about before committing capital to this stock.

Switching gears from Precision Tsugami (China), if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.