Why Shenglong Splendecor International's (HKG:8481) CEO Pay Matters

The CEO of Shenglong Splendecor International Limited (HKG:8481) is Yingming Sheng, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Shenglong Splendecor International.

See our latest analysis for Shenglong Splendecor International

How Does Total Compensation For Yingming Sheng Compare With Other Companies In The Industry?

According to our data, Shenglong Splendecor International Limited has a market capitalization of HK$123m, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2019. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at CN¥820.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.3m. From this we gather that Yingming Sheng is paid around the median for CEOs in the industry. What's more, Yingming Sheng holds HK$61m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. In Shenglong Splendecor International's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 Shenglong Splendecor International Limited's Growth Numbers

Shenglong Splendecor International Limited has reduced its earnings per share by 16% a year over the last three years. Its revenue is down 7.4% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Shenglong Splendecor International Limited Been A Good Investment?

Since shareholders would have lost about 48% over three years, some Shenglong Splendecor International Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Shenglong Splendecor International pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Shenglong Splendecor International that investors should be aware of in a dynamic business environment.

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