What We Learned About Modern Media Holdings' (HKG:72) CEO Pay

Zhong Shao has been the CEO of Modern Media Holdings Limited (HKG:72) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Modern Media Holdings.

View our latest analysis for Modern Media Holdings

How Does Total Compensation For Zhong Shao Compare With Other Companies In The Industry?

At the time of writing, our data shows that Modern Media Holdings Limited has a market capitalization of HK$64m, and reported total annual CEO compensation of CN¥3.4m for the year to December 2019. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at CN¥3.32m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥2.2m. Accordingly, our analysis reveals that Modern Media Holdings Limited pays Zhong Shao north of the industry median. What's more, Zhong Shao holds HK$48m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Modern Media 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.

Modern Media Holdings Limited's Growth

Modern Media Holdings Limited has reduced its earnings per share by 20% a year over the last three years. Its revenue is down 13% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Modern Media Holdings Limited Been A Good Investment?

With a three year total loss of 79% for the shareholders, Modern Media Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Zhong receives almost all of their compensation through a salary. As previously discussed, Zhong is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 2 warning signs for Modern Media Holdings that investors should think about before committing capital to this stock.

Important note: Modern Media Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. 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.
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