Shareholders May Be A Bit More Conservative With Sinomax Group Limited's (HKG:1418) CEO Compensation For Now

Key Insights

• Sinomax Group will host its Annual General Meeting on 7th of June
• Salary of HK$2.09m is part of CEO Tung Cheung's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Sinomax Group's EPS grew by 2.3% and over the past three years, the total loss to shareholders 5.8%

In the past three years, shareholders of Sinomax Group Limited (HKG:1418) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 7th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Sinomax Group

Comparing Sinomax Group Limited's CEO Compensation With The Industry

Our data indicates that Sinomax Group Limited has a market capitalization of HK$261m, and total annual CEO compensation was reported as HK$2.1m for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of HK$2.09m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Consumer Durables industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. From this we gather that Tung Cheung is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$2.1m	HK$2.1m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$2.1m	HK$2.1m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Sinomax Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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 Sinomax Group Limited's Growth Numbers

Sinomax Group Limited has seen its earnings per share (EPS) increase by 2.3% a year over the past three years. Its revenue is up 14% over the last year.

We think the revenue growth is good. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. 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 Sinomax Group Limited Been A Good Investment?

Since shareholders would have lost about 5.8% over three years, some Sinomax Group Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Sinomax Group pays its CEO a majority of compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 2 warning signs for Sinomax Group that you should be aware of before investing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.