Here's What We Learned About The CEO Pay At Sanbase Corporation Limited (HKG:8501)

Sai Chuen Wong is the CEO of Sanbase Corporation Limited (HKG:8501), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Sanbase pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Sanbase

How Does Total Compensation For Sai Chuen Wong Compare With Other Companies In The Industry?

Our data indicates that Sanbase Corporation Limited has a market capitalization of HK$80m, and total annual CEO compensation was reported as HK$2.7m for the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at HK$1.98m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. This suggests that Sai Chuen Wong is paid more than the median for the industry. Moreover, Sai Chuen Wong also holds HK$45m worth of Sanbase stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 91% of total compensation represents salary and 8.7% is other remuneration. Sanbase pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Sanbase Corporation Limited's Growth Numbers

Over the last three years, Sanbase Corporation Limited has shrunk its earnings per share by 4.0% per year. In the last year, its revenue is down 24%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sanbase Corporation Limited Been A Good Investment?

Since shareholders would have lost about 75% over three years, some Sanbase Corporation Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, Sanbase pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Sanbase that investors should be aware of in a dynamic business environment.

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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