SenseTime Group Inc.'s (HKG:20) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• SenseTime Group will host its Annual General Meeting on 26th of June
• Salary of CN¥2.13m is part of CEO Li Xu's total remuneration
• The total compensation is similar to the average for the industry
• SenseTime Group's three-year loss to shareholders was 74% while its EPS grew by 88% over the past three years

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The underwhelming share price performance of SenseTime Group Inc. (HKG:20) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 26th of June. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for SenseTime Group

How Does Total Compensation For Li Xu Compare With Other Companies In The Industry?

According to our data, SenseTime Group Inc. has a market capitalization of HK$53b, and paid its CEO total annual compensation worth CN¥3.6m over the year to December 2024. Notably, that's an increase of 8.6% over the year before. Notably, the salary which is CN¥2.13m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the Hong Kong Software industry with market capitalizations ranging from HK$31b to HK$94b, the reported median CEO total compensation was CN¥3.7m. From this we gather that Li Xu is paid around the median for CEOs in the industry. Furthermore, Li Xu directly owns HK$1.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. In SenseTime Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at SenseTime Group Inc.'s Growth Numbers

SenseTime Group Inc. has seen its earnings per share (EPS) increase by 88% a year over the past three years. Its revenue is up 11% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has SenseTime Group Inc. Been A Good Investment?

The return of -74% over three years would not have pleased SenseTime Group Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for SenseTime Group that you should be aware of before investing.

Switching gears from SenseTime 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. 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.