Stock Analysis

What Can We Learn About Tong Ren Tang Technologies' (HKG:1666) CEO Compensation?

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SEHK:1666
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This article will reflect on the compensation paid to Yu Wang who has served as CEO of Tong Ren Tang Technologies Co. Ltd. (HKG:1666) since 2008. This analysis will also assess whether Tong Ren Tang Technologies pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Tong Ren Tang Technologies

How Does Total Compensation For Yu Wang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Tong Ren Tang Technologies Co. Ltd. has a market capitalization of HK$6.1b, and reported total annual CEO compensation of CN¥2.2m for the year to December 2019. That's a slightly lower by 3.6% over the previous year. In particular, the salary of CN¥1.21m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was CN¥1.8m. From this we gather that Yu Wang is paid around the median for CEOs in the industry.

Component20192018Proportion (2019)
Salary CN¥1.2m CN¥1.3m 56%
Other CN¥942k CN¥953k 44%
Total CompensationCN¥2.2m CN¥2.2m100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. Although there is a difference in how total compensation is set, Tong Ren Tang Technologies more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
SEHK:1666 CEO Compensation December 29th 2020

Tong Ren Tang Technologies Co. Ltd.'s Growth

Over the last three years, Tong Ren Tang Technologies Co. Ltd. has shrunk its earnings per share by 19% per year. In the last year, its revenue is down 10%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Tong Ren Tang Technologies Co. Ltd. Been A Good Investment?

Given the total shareholder loss of 54% over three years, many shareholders in Tong Ren Tang Technologies Co. Ltd. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Tong Ren Tang Technologies pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Tong Ren Tang Technologies that you should be aware of before investing.

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