Hua Yang became the CEO of NNK Group Limited (HKG:3773) in 2014, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NNK Group.
Check out our latest analysis for NNK Group
Comparing NNK Group Limited's CEO Compensation With the industry
According to our data, NNK Group Limited has a market capitalization of HK$151m, and paid its CEO total annual compensation worth CN¥1.2m over the year to December 2019. This means that the compensation hasn't changed much from last year. Notably, the salary which is CN¥1.00m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥640k. This suggests that Hua Yang is paid more than the median for the industry. Furthermore, Hua Yang directly owns HK$22m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CN¥1.0m | CN¥1.0m | 83% |
| Other | CN¥201k | CN¥204k | 17% |
| Total Compensation | CN¥1.2m | CN¥1.2m | 100% |
Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. According to our research, NNK Group 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.
NNK Group Limited's Growth
Over the past three years, NNK Group Limited has seen its earnings per share (EPS) grow by 1.2% per year. Its revenue is up 8.0% over the last year.
We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 NNK Group Limited Been A Good Investment?
With a three year total loss of 53% for the shareholders, NNK Group Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As previously discussed, Hua is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing for NNK Group, and although EPS growth is steady, it hasn't set the world on fire. This doesn't look good when you see that Hua is earning more than the industry median. All things considered, we believe shareholders would be disappointed to see Hua's compensation grow without first seeing an improvement in the performance of the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for NNK Group (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from NNK Group, 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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About SEHK:3773
Yinsheng Digifavor
Provides mobile top-up services to mobile subscribers through electronic banking systems in the People’s Republic of China.
Solid track record with adequate balance sheet.
