Here's Why Shareholders Should Examine SANVO Fine Chemicals Group Limited's (HKG:301) CEO Compensation Package More Closely

Key Insights

• SANVO Fine Chemicals Group to hold its Annual General Meeting on 28th of June
• Total pay for CEO Ernest Chen includes CN¥214.0k salary
• Total compensation is similar to the industry average
• SANVO Fine Chemicals Group's EPS declined by 55% over the past three years while total shareholder loss over the past three years was 2.3%

Shareholders will probably not be too impressed with the underwhelming results at SANVO Fine Chemicals Group Limited (HKG:301) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 28th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for SANVO Fine Chemicals Group

Comparing SANVO Fine Chemicals Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that SANVO Fine Chemicals Group Limited has a market capitalization of HK$564m, and reported total annual CEO compensation of CN¥1.2m for the year to December 2023. Notably, that's a decrease of 12% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥214k.

For comparison, other companies in the Hong Kong Chemicals industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.6m. From this we gather that Ernest Chen is paid around the median for CEOs in the industry. Moreover, Ernest Chen also holds HK$414m worth of SANVO Fine Chemicals Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥214k	CN¥214k	18%
Other	CN¥967k	CN¥1.1m	82%
Total Compensation	CN¥1.2m	CN¥1.3m	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. In SANVO Fine Chemicals Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at SANVO Fine Chemicals Group Limited's Growth Numbers

Over the last three years, SANVO Fine Chemicals Group Limited has shrunk its earnings per share by 55% per year. It achieved revenue growth of 14% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 SANVO Fine Chemicals Group Limited Been A Good Investment?

With a three year total loss of 2.3% for the shareholders, SANVO Fine Chemicals Group Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

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 3 warning signs for SANVO Fine Chemicals Group you should be aware of, and 2 of them can't be ignored.

Switching gears from SANVO Fine Chemicals Group, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com