What Can We Conclude About Cinda International Holdings' (HKG:111) CEO Pay?

By
Simply Wall St
Published
December 22, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

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$250m, 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. We note that the salary portion, which stands at HK$1.88m constitutes the majority of total compensation received by the CEO.

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$1.3m. Hence, we can conclude that Zhijian Gong is remunerated higher than 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 77% of total compensation represents salary, while the remainder of 23% is other remuneration. Cinda International Holdings sets aside a smaller share of compensation for salary, in comparison to the overall 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 December 23rd 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. It achieved revenue growth of 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. In conclusion we can't form a strong opinion about business performance yet; but it's one 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?

Since shareholders would have lost about 53% over three years, some Cinda International Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Cinda International Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. On the bright side, at lease revenue growth seems to be marching northward. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Cinda International Holdings (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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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