How Should Investors React To Labixiaoxin Snacks Group's (HKG:1262) CEO Pay?

Yu Shuang Zheng is the CEO of Labixiaoxin Snacks Group Limited (HKG:1262), 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.

View our latest analysis for Labixiaoxin Snacks Group

Comparing Labixiaoxin Snacks Group Limited's CEO Compensation With the industry

Our data indicates that Labixiaoxin Snacks Group Limited has a market capitalization of HK$419m, and total annual CEO compensation was reported as CN¥800k for the year to December 2019. This means that the compensation hasn't changed much from last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥800k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.3m. That is to say, Yu Shuang Zheng is paid under the industry median.

On an industry level, roughly 81% of total compensation represents salary and 19% is other remuneration. Speaking on a company level, Labixiaoxin Snacks Group prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Labixiaoxin Snacks Group Limited's Growth Numbers

Labixiaoxin Snacks Group Limited has seen its earnings per share (EPS) increase by 34% a year over the past three years. It saw its revenue drop 5.4% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Labixiaoxin Snacks Group Limited Been A Good Investment?

With a three year total loss of 43% for the shareholders, Labixiaoxin Snacks Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Labixiaoxin Snacks Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Labixiaoxin Snacks Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Yu Shuang is compensated fairly. But shareholders will likely want to hold off on any raise for Yu Shuang until investor returns are positive.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Labixiaoxin Snacks Group you should be aware of, and 1 of them shouldn't be ignored.

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