Key Things To Understand About Sunfonda Group Holdings' (HKG:1771) CEO Pay Cheque

Man Chiu became the CEO of Sunfonda Group Holdings Limited (HKG:1771) in 2011, 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 Sunfonda Group Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Sunfonda Group Holdings

How Does Total Compensation For Man Chiu Compare With Other Companies In The Industry?

Our data indicates that Sunfonda Group Holdings Limited has a market capitalization of HK$834m, and total annual CEO compensation was reported as CN¥810k for the year to December 2019. This means that the compensation hasn't changed much from last year. Notably, the salary which is CN¥800.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.8m. In other words, Sunfonda Group Holdings pays its CEO lower than the industry median.

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 9.6% of the pie. Sunfonda Group Holdings has gone down a largely traditional route, paying Man Chiu a high salary, giving it preference over non-salary benefits. 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 Sunfonda Group Holdings Limited's Growth Numbers

Over the last three years, Sunfonda Group Holdings Limited has shrunk its earnings per share by 2.9% per year. It saw its revenue drop 3.2% over the last year.

A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sunfonda Group Holdings Limited Been A Good Investment?

Sunfonda Group Holdings Limited has served shareholders reasonably well, with a total return of 21% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Sunfonda Group Holdings pays its CEO a majority of compensation through a salary. As we touched on above, Sunfonda Group Holdings Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we have not been overly impressed by shareholder returns, EPS growth has been negative over the last three years, a real headache for the company. We can't categorize CEO compensation as high, but shareholders might object to a raise at this stage, considering overall poor performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Sunfonda Group Holdings (1 is potentially serious!) that you should be aware of before investing here.

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.

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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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