We Think New Sparkle Roll International Group Limited's (HKG:970) CEO Compensation Package Needs To Be Put Under A Microscope

Shareholders will probably not be too impressed with the underwhelming results at New Sparkle Roll International Group Limited (HKG:970) recently. At the upcoming AGM on 27 September 2022, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for New Sparkle Roll International Group

Comparing New Sparkle Roll International Group Limited's CEO Compensation With The Industry

According to our data, New Sparkle Roll International Group Limited has a market capitalization of HK$503m, and paid its CEO total annual compensation worth HK$2.1m over the year to March 2022. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$60k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. This suggests that New Sparkle Roll International Group remunerates its CEO largely in line with the industry average. Moreover, Hao Jiang Zheng also holds HK$979k worth of New Sparkle Roll International Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	HK$60k	HK$62k	3%
Other	HK$2.0m	HK$2.0m	97%
Total Compensation	HK$2.1m	HK$2.1m	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. Investors may find it interesting that New Sparkle Roll International Group paid a marginal salary to Hao Jiang Zheng, over the past year, focusing on non-salary compensation instead. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

New Sparkle Roll International Group Limited's Growth

Over the last three years, New Sparkle Roll International Group Limited has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 4.4%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 New Sparkle Roll International Group Limited Been A Good Investment?

With a total shareholder return of -66% over three years, New Sparkle Roll International Group Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

New Sparkle Roll International Group prefers rewarding its CEO through non-salary benefits. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for New Sparkle Roll International Group (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.