Shareholders Will Probably Hold Off On Increasing 3SBio Inc.'s (HKG:1530) CEO Compensation For The Time Being

Key Insights

• 3SBio will host its Annual General Meeting on 25th of June
• Salary of CN¥1.28m is part of CEO Jing Lou's total remuneration
• Total compensation is similar to the industry average
• 3SBio's three-year loss to shareholders was 45% while its EPS grew by 26% over the past three years

The underwhelming share price performance of 3SBio Inc. (HKG:1530) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 25th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for 3SBio

How Does Total Compensation For Jing Lou Compare With Other Companies In The Industry?

According to our data, 3SBio Inc. has a market capitalization of HK$15b, and paid its CEO total annual compensation worth CN¥4.9m over the year to December 2023. That's a notable increase of 9.4% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥1.3m.

On comparing similar companies from the Hong Kong Biotechs industry with market caps ranging from HK$7.8b to HK$25b, we found that the median CEO total compensation was CN¥4.8m. This suggests that 3SBio remunerates its CEO largely in line with the industry average. Furthermore, Jing Lou directly owns HK$319m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.3m	CN¥1.0m	26%
Other	CN¥3.6m	CN¥3.4m	74%
Total Compensation	CN¥4.9m	CN¥4.5m	100%

On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. It's interesting to note that 3SBio allocates a smaller portion of compensation to salary 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.

3SBio Inc.'s Growth

3SBio Inc. has seen its earnings per share (EPS) increase by 26% a year over the past three years. It achieved revenue growth of 14% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has 3SBio Inc. Been A Good Investment?

Few 3SBio Inc. shareholders would feel satisfied with the return of -45% over three years. 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 stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for 3SBio that you should be aware of before investing.

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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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