Should Shareholders Reconsider Sunshine 100 China Holdings Ltd's (HKG:2608) CEO Compensation Package?

Key Insights

• Sunshine 100 China Holdings to hold its Annual General Meeting on 26th of June
• CEO Xiaodi Yi's total compensation includes salary of CN¥1.46m
• Total compensation is similar to the industry average
• Over the past three years, Sunshine 100 China Holdings' EPS fell by 49% and over the past three years, the total loss to shareholders 96%

Shareholders will probably not be too impressed with the underwhelming results at Sunshine 100 China Holdings Ltd (HKG:2608) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Sunshine 100 China Holdings

Comparing Sunshine 100 China Holdings Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Sunshine 100 China Holdings Ltd has a market capitalization of HK$110m, and reported total annual CEO compensation of CN¥1.5m for the year to December 2023. Notably, that's an increase of 26% over the year before. In particular, the salary of CN¥1.46m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.7m. This suggests that Sunshine 100 China Holdings remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.5m	CN¥1.2m	99%
Other	CN¥12k	CN¥11k	1%
Total Compensation	CN¥1.5m	CN¥1.2m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Sunshine 100 China Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Sunshine 100 China Holdings Ltd's Growth

Sunshine 100 China Holdings Ltd has reduced its earnings per share by 49% a year over the last three years. Its revenue is down 11% over the previous year.

The decline in EPS is a bit concerning. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Sunshine 100 China Holdings Ltd Been A Good Investment?

Few Sunshine 100 China Holdings Ltd shareholders would feel satisfied with the return of -96% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Xiaodi receives almost all of their compensation through a salary. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Sunshine 100 China Holdings (2 are significant!) that you should be aware of before investing here.

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