The Compensation For 3SBio Inc.'s (HKG:1530) CEO Looks Deserved And Here's Why

Key Insights

• 3SBio will host its Annual General Meeting on 25th of June
• CEO Jing Lou's total compensation includes salary of CN¥2.38m
• Total compensation is similar to the industry average
• 3SBio's EPS grew by 11% over the past three years while total shareholder return over the past three years was 265%

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It would be hard to discount the role that CEO Jing Lou has played in delivering the impressive results at 3SBio Inc. (HKG:1530) recently. Coming up to the next AGM on 25th of June, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for 3SBio

Comparing 3SBio Inc.'s CEO Compensation With The Industry

Our data indicates that 3SBio Inc. has a market capitalization of HK$51b, and total annual CEO compensation was reported as CN¥8.1m for the year to December 2024. That's a notable increase of 66% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥2.4m.

On comparing similar companies from the Hong Kong Biotechs industry with market caps ranging from HK$31b to HK$94b, we found that the median CEO total compensation was CN¥7.4m. So it looks like 3SBio compensates Jing Lou in line with the median for the industry. Moreover, Jing Lou also holds HK$1.2b worth of 3SBio stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. 3SBio pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

3SBio Inc.'s Growth

3SBio Inc. has seen its earnings per share (EPS) increase by 11% a year over the past three years. It achieved revenue growth of 17% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has 3SBio Inc. Been A Good Investment?

We think that the total shareholder return of 265%, over three years, would leave most 3SBio Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term 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 2 warning signs for 3SBio you should be aware of, and 1 of them doesn't sit too well with us.

Important note: 3SBio 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. 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.