Here's Why Shareholders May Want To Be Cautious With Increasing Suzhou Basecare Medical Corporation Limited's (HKG:2170) CEO Pay Packet

Key Insights

• Suzhou Basecare Medical's Annual General Meeting to take place on 6th of June
• Total pay for CEO Bo Liang includes CN¥2.57m salary
• The total compensation is 97% higher than the average for the industry
• Over the past three years, Suzhou Basecare Medical's EPS grew by 74% and over the past three years, the total loss to shareholders 92%

The underwhelming share price performance of Suzhou Basecare Medical Corporation Limited (HKG:2170) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 6th of June. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Suzhou Basecare Medical

How Does Total Compensation For Bo Liang Compare With Other Companies In The Industry?

Our data indicates that Suzhou Basecare Medical Corporation Limited has a market capitalization of HK$563m, and total annual CEO compensation was reported as CN¥3.0m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is CN¥2.57m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Medical Equipment industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.5m. Hence, we can conclude that Bo Liang is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥2.6m	CN¥2.8m	84%
Other	CN¥475k	CN¥274k	16%
Total Compensation	CN¥3.0m	CN¥3.0m	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Suzhou Basecare Medical pays out 84% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Suzhou Basecare Medical Corporation Limited's Growth Numbers

Suzhou Basecare Medical Corporation Limited's earnings per share (EPS) grew 74% per year over the last three years. It achieved revenue growth of 48% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Suzhou Basecare Medical Corporation Limited Been A Good Investment?

The return of -92% over three years would not have pleased Suzhou Basecare Medical Corporation Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Suzhou Basecare Medical that investors should think about before committing capital to this stock.

Switching gears from Suzhou Basecare Medical, 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.