We Discuss Why Sunac Services Holdings Limited's (HKG:1516) CEO Compensation May Be Closely Reviewed
Key Insights
- Sunac Services Holdings will host its Annual General Meeting on 22nd of May
- CEO Hongling Cao's total compensation includes salary of CN¥2.27m
- The total compensation is 91% higher than the average for the industry
- Over the past three years, Sunac Services Holdings' EPS fell by 92% and over the past three years, the total loss to shareholders 42%
Shareholders will probably not be too impressed with the underwhelming results at Sunac Services Holdings Limited (HKG:1516) recently. At the upcoming AGM on 22nd of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Sunac Services Holdings
How Does Total Compensation For Hongling Cao Compare With Other Companies In The Industry?
According to our data, Sunac Services Holdings Limited has a market capitalization of HK$5.5b, and paid its CEO total annual compensation worth CN¥5.7m over the year to December 2024. We note that's a decrease of 22% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥2.3m.
In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was CN¥3.0m. Hence, we can conclude that Hongling Cao is remunerated higher than the industry median. Moreover, Hongling Cao also holds HK$4.0m worth of Sunac Services Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | CN¥2.3m | CN¥2.9m | 40% |
| Other | CN¥3.4m | CN¥4.5m | 60% |
| Total Compensation | CN¥5.7m | CN¥7.3m | 100% |
On an industry level, roughly 82% of total compensation represents salary and 18% is other remuneration. Sunac Services Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Sunac Services Holdings Limited's Growth Numbers
Over the last three years, Sunac Services Holdings Limited has shrunk its earnings per share by 92% per year. In the last year, its revenue changed by just 0.6%.
Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Sunac Services Holdings Limited Been A Good Investment?
The return of -42% over three years would not have pleased Sunac Services Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Sunac Services Holdings that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
Valuation is complex, but we're here to simplify it.
Discover if Sunac Services Holdings might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.