Does Sunshine 100 China Holdings' (HKG:2608) CEO Salary Compare Well With The Performance Of The Company?

Xiaodi Yi became the CEO of Sunshine 100 China Holdings Ltd (HKG:2608) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Sunshine 100 China Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out 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$2.9b, and reported total annual CEO compensation of CN¥2.1m for the year to December 2019. That's a slight decrease of 5.2% on the prior year. In particular, the salary of CN¥1.25m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was CN¥3.1m. That is to say, Xiaodi Yi is paid under the industry median.

Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. It's interesting to note that Sunshine 100 China Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Sunshine 100 China Holdings Ltd's Growth Numbers

Sunshine 100 China Holdings Ltd has seen its earnings per share (EPS) increase by 41% a year over the past three years. In the last year, its revenue is up 11%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Sunshine 100 China Holdings Ltd Been A Good Investment?

Since shareholders would have lost about 65% over three years, some Sunshine 100 China Holdings Ltd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Sunshine 100 China Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However we must not forget that the EPS growth has been very strong over three years. It's tough to criticize CEO compensation when the per-share EPS movement is positive. But shareholders will likely want to hold off on any raise for Xiaodi until investor returns are positive.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Sunshine 100 China Holdings we think you should know about.

Important note: Sunshine 100 China Holdings 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. 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.
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