How Should Investors Feel About Sinopharm Tech Holdings' (HKG:8156) CEO Remuneration?

Ting Chan is the CEO of Sinopharm Tech Holdings Limited (HKG:8156), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. 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 Sinopharm Tech Holdings

How Does Total Compensation For Ting Chan Compare With Other Companies In The Industry?

According to our data, Sinopharm Tech Holdings Limited has a market capitalization of HK$601m, and paid its CEO total annual compensation worth HK$3.3m over the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$3.00m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. Hence, we can conclude that Ting Chan is remunerated higher than the industry median.

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. Our data reveals that Sinopharm Tech Holdings allocates salary more or less in line with the wider market. 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 Sinopharm Tech Holdings Limited's Growth Numbers

Sinopharm Tech Holdings Limited has seen its earnings per share (EPS) increase by 27% a year over the past three years. It achieved revenue growth of 82% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Sinopharm Tech Holdings Limited Been A Good Investment?

Given the total shareholder loss of 82% over three years, many shareholders in Sinopharm Tech Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Ting is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Considering overall performance, we can't say Ting is underpaid, in fact compensation is definitely on the higher side.

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 3 warning signs for Sinopharm Tech Holdings that investors should look into moving forward.

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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