This Is Why Century Sage Scientific Holdings Limited's (HKG:1450) CEO Compensation Looks Appropriate

Simply Wall St
June 03, 2021
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The performance at Century Sage Scientific Holdings Limited (HKG:1450) has been rather lacklustre of late and shareholders may be wondering what CEO Chi Sum Lo is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 10 June 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Century Sage Scientific Holdings

How Does Total Compensation For Chi Sum Lo Compare With Other Companies In The Industry?

At the time of writing, our data shows that Century Sage Scientific Holdings Limited has a market capitalization of HK$156m, and reported total annual CEO compensation of CN¥1.4m for the year to December 2020. Notably, that's a decrease of 23% over the year before. We note that the salary portion, which stands at CN¥1.41m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥2.1m. Accordingly, Century Sage Scientific Holdings pays its CEO under the industry median. What's more, Chi Sum Lo holds HK$53m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary CN¥1.4m CN¥1.7m 99%
Other CN¥16k CN¥157k 1%
Total CompensationCN¥1.4m CN¥1.8m100%

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. Century Sage Scientific Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

SEHK:1450 CEO Compensation June 3rd 2021

A Look at Century Sage Scientific Holdings Limited's Growth Numbers

Century Sage Scientific Holdings Limited has seen its earnings per share (EPS) increase by 25% a year over the past three years. It saw its revenue drop 20% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Century Sage Scientific Holdings Limited Been A Good Investment?

Few Century Sage Scientific Holdings Limited shareholders would feel satisfied with the return of -44% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Chi Sum receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss is certainly disheartening. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

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 Century Sage Scientific Holdings you should be aware of, and 1 of them is 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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