Most Shareholders Will Probably Agree With Alpha Era International Holdings Limited's (HKG:8406) CEO Compensation

Shareholders may be wondering what CEO Jiansheng Xiao plans to do to improve the less than great performance at Alpha Era International Holdings Limited (HKG:8406) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 07 May 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Alpha Era International Holdings

How Does Total Compensation For Jiansheng Xiao Compare With Other Companies In The Industry?

Our data indicates that Alpha Era International Holdings Limited has a market capitalization of HK$122m, and total annual CEO compensation was reported as CN¥614k for the year to December 2020. We note that's an increase of 19% above last year. We note that the salary portion, which stands at CN¥402.0k 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¥1.6m. In other words, Alpha Era International Holdings pays its CEO lower than the industry median.

Component	2020	2019	Proportion (2020)
Salary	CN¥402k	CN¥324k	65%
Other	CN¥212k	CN¥192k	35%
Total Compensation	CN¥614k	CN¥516k	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. There isn't a significant difference between Alpha Era International Holdings and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Alpha Era International Holdings Limited's Growth

Alpha Era International Holdings Limited has seen its earnings per share (EPS) increase by 29% a year over the past three years. It achieved revenue growth of 16% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Alpha Era International Holdings Limited Been A Good Investment?

The return of -37% over three years would not have pleased Alpha Era International Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Alpha Era International Holdings that investors should look into moving forward.

Switching gears from Alpha Era International Holdings, 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. 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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