Key Things To Understand About Precision Tsugami (China)'s (HKG:1651) CEO Pay Cheque

The CEO of Precision Tsugami (China) Corporation Limited (HKG:1651) is Donglei Tang, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Precision Tsugami (China)

Comparing Precision Tsugami (China) Corporation Limited's CEO Compensation With the industry

According to our data, Precision Tsugami (China) Corporation Limited has a market capitalization of HK$2.8b, and paid its CEO total annual compensation worth CN¥2.0m over the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of CN¥2.0m is the entirety of the CEO compensation.

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¥1.4m. This suggests that Donglei Tang is paid more than the median for the industry. Furthermore, Donglei Tang directly owns HK$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. Speaking on a company level, Precision Tsugami (China) prefers to tread along a traditional path, disbursing all compensation through a salary. 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

Over the last three years, Precision Tsugami (China) Corporation Limited has shrunk its earnings per share by 1.8% per year. Its revenue is down 1.6% over the previous year.

The lack of EPS growth is certainly unimpressive. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

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

Precision Tsugami (China) Corporation Limited has generated a total shareholder return of 4.4% over three years, so most shareholders wouldn't be too disappointed. 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...

Precision Tsugami (China) rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Donglei is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. While shareholder returns are acceptable, they don't delight. So you can understand why we do not think CEO compensation is particularly modest!

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. 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.

Important note: Precision Tsugami (China) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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