This article will reflect on the compensation paid to Xin Marita Pan Zhang who has served as CEO of SOHO China Limited (HKG:410) since 2007. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for SOHO China
Comparing SOHO China Limited's CEO Compensation With the industry
At the time of writing, our data shows that SOHO China Limited has a market capitalization of HK$13b, and reported total annual CEO compensation of CN¥2.9m for the year to December 2019. That's just a smallish increase of 7.7% on last year. We note that the salary portion, which stands at CN¥2.53m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between HK$7.8b and HK$25b had a median total CEO compensation of CN¥5.0m. In other words, SOHO China pays its CEO lower than the industry median. What's more, Xin Marita Pan Zhang holds HK$4.1b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CN¥2.5m | CN¥1.9m | 89% |
| Other | CN¥323k | CN¥727k | 11% |
| Total Compensation | CN¥2.9m | CN¥2.6m | 100% |
Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. According to our research, SOHO China has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
SOHO China Limited's Growth
Over the last three years, SOHO China Limited has shrunk its earnings per share by 39% per year. It achieved revenue growth of 37% over the last year.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has SOHO China Limited Been A Good Investment?
Given the total shareholder loss of 45% over three years, many shareholders in SOHO China 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...
As we noted earlier, SOHO China pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But poor shareholder returns EPS growth have hampered the company over the past three years. On the flip side, recent revenue growth has been positive. So, although Xin Marita Pan is modestly paid, shareholders might want to see positive shareholder returns before warming to the idea 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 identified 3 warning signs for SOHO China (1 is 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.
If you’re looking to trade SOHO China, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About SEHK:410
SOHO China
Engages in the real estate development, and property leasing and management activities in the People’s Republic of China.
Very low with worrying balance sheet.
