How Should Investors Feel About Ronshine China Holdings' (HKG:3301) CEO Remuneration?

This article will reflect on the compensation paid to Zonghong Ou who has served as CEO of Ronshine China Holdings Limited (HKG:3301) since 2014. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ronshine China Holdings.

View our latest analysis for Ronshine China Holdings

How Does Total Compensation For Zonghong Ou Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ronshine China Holdings Limited has a market capitalization of HK$9.9b, and reported total annual CEO compensation of CN¥3.2m for the year to December 2019. Notably, that's an increase of 39% over the year before. In particular, the salary of CN¥3.13m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$7.8b to HK$25b, we found that the median CEO total compensation was CN¥4.3m. This suggests that Ronshine China Holdings remunerates its CEO largely in line with the industry average.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Investors will find it interesting that Ronshine China Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ronshine China Holdings Limited's Growth

Over the past three years, Ronshine China Holdings Limited has seen its earnings per share (EPS) grow by 14% per year. In the last year, its revenue is down 1.7%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Ronshine China Holdings Limited Been A Good Investment?

Given the total shareholder loss of 23% over three years, many shareholders in Ronshine China Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Zonghong receives almost all of their compensation through a salary. As we touched on above, Ronshine China Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is a bit concerning) in Ronshine China Holdings we think you should know about.

Switching gears from Ronshine China Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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