Does Cinda International Holdings' (HKG:111) CEO Salary Compare Well With The Performance Of The Company?

By
Simply Wall St
Published
September 23, 2020
SEHK:111

This article will reflect on the compensation paid to Zhijian Gong who has served as CEO of Cinda International Holdings Limited (HKG:111) since 2015. This analysis will also assess whether Cinda International Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Cinda International Holdings

Comparing Cinda International Holdings Limited's CEO Compensation With the industry

According to our data, Cinda International Holdings Limited has a market capitalization of HK$253m, and paid its CEO total annual compensation worth HK$2.8m over the year to December 2019. That's a notable increase of 38% on last year. In particular, the salary of HK$1.88m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.6m. Accordingly, our analysis reveals that Cinda International Holdings Limited pays Zhijian Gong north of the industry median.

Component20192018Proportion (2019)
Salary HK$1.9m HK$1.4m 67%
Other HK$935k HK$624k 33%
Total CompensationHK$2.8m HK$2.0m100%

Speaking on an industry level, nearly 75% of total compensation represents salary, while the remainder of 25% is other remuneration. In Cinda International Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
SEHK:111 CEO Compensation September 24th 2020

Cinda International Holdings Limited's Growth

Over the last three years, Cinda International Holdings Limited has shrunk its earnings per share by 2.6% per year. Its revenue is up 15% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Cinda International Holdings Limited Been A Good Investment?

With a three year total loss of 55% for the shareholders, Cinda International Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Cinda International Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. In contrast, revenue growth for the company has been showing a positive trend. Suffice it to say, we don't think the CEO is underpaid!

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Cinda International Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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