Should Shareholders Have Second Thoughts About A Pay Rise For New Silkroad Culturaltainment Limited's (HKG:472) CEO This Year?

Simply Wall St
June 02, 2021
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Performance at New Silkroad Culturaltainment Limited (HKG:472) has not been particularly rosy recently and shareholders will likely be holding CEO Paul Ng and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 09 June 2021. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for New Silkroad Culturaltainment

How Does Total Compensation For Paul Ng Compare With Other Companies In The Industry?

According to our data, New Silkroad Culturaltainment Limited has a market capitalization of HK$642m, and paid its CEO total annual compensation worth HK$718k over the year to December 2020. Notably, that's a decrease of 54% over the year before. Notably, the salary which is HK$653.0k, 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$2.1m. In other words, New Silkroad Culturaltainment pays its CEO lower than the industry median.

Component20202019Proportion (2020)
Salary HK$653k HK$1.4m 91%
Other HK$65k HK$138k 9%
Total CompensationHK$718k HK$1.6m100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Our data reveals that New Silkroad Culturaltainment 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.

SEHK:472 CEO Compensation June 3rd 2021

A Look at New Silkroad Culturaltainment Limited's Growth Numbers

New Silkroad Culturaltainment Limited has reduced its earnings per share by 33% a year over the last three years. It saw its revenue drop 44% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 New Silkroad Culturaltainment Limited Been A Good Investment?

The return of -75% over three years would not have pleased New Silkroad Culturaltainment Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for New Silkroad Culturaltainment you should be aware of, and 2 of them are a bit concerning.

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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