How Does New Century Healthcare Holding's (HKG:1518) CEO Pay Compare With Company Performance?

This article will reflect on the compensation paid to Jason Zhou who has served as CEO of New Century Healthcare Holding Co. Limited (HKG:1518) since 2015. This analysis will also assess whether New Century Healthcare Holding pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for New Century Healthcare Holding

Comparing New Century Healthcare Holding Co. Limited's CEO Compensation With the industry

Our data indicates that New Century Healthcare Holding Co. Limited has a market capitalization of HK$887m, and total annual CEO compensation was reported as CN¥2.1m for the year to December 2019. That's just a smallish increase of 3.9% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥2.1m.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.8m. So it looks like New Century Healthcare Holding compensates Jason Zhou in line with the median for the industry. Moreover, Jason Zhou also holds HK$353m worth of New Century Healthcare Holding stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 91% of total compensation represents salary and 9.4% is other remuneration. On a company level, New Century Healthcare Holding prefers to reward its CEO through a salary, opting not to pay Jason Zhou through non-salary benefits. 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.

New Century Healthcare Holding Co. Limited's Growth

New Century Healthcare Holding Co. Limited has reduced its earnings per share by 131% a year over the last three years. In the last year, its revenue is down 12%.

The decline in EPS is a bit concerning. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has New Century Healthcare Holding Co. Limited Been A Good Investment?

Given the total shareholder loss of 80% over three years, many shareholders in New Century Healthcare Holding Co. Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

New Century Healthcare Holding pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, New Century Healthcare Holding Co. Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for New Century Healthcare Holding that you should be aware of before investing.

Switching gears from New Century Healthcare Holding, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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