What Can We Learn About PINE Technology Holdings' (HKG:1079) CEO Compensation?

This article will reflect on the compensation paid to Sanhuo Zhang who has served as CEO of PINE Technology Holdings Limited (HKG:1079) since 2018. 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 PINE Technology Holdings

How Does Total Compensation For Sanhuo Zhang Compare With Other Companies In The Industry?

According to our data, PINE Technology Holdings Limited has a market capitalization of HK$111m, and paid its CEO total annual compensation worth US$713k over the year to June 2020. That's a notable decrease of 28% on last year. In particular, the salary of US$442.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was US$143k. This suggests that Sanhuo Zhang is paid more than the median for the industry.

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. It's interesting to note that PINE Technology Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 PINE Technology Holdings Limited's Growth Numbers

Over the last three years, PINE Technology Holdings Limited has shrunk its earnings per share by 44% per year. It saw its revenue drop 35% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has PINE Technology Holdings Limited Been A Good Investment?

With a three year total loss of 93% for the shareholders, PINE Technology Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Sanhuo is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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. We did our research and identified 2 warning signs (and 1 which is potentially serious) in PINE Technology Holdings we think you should know about.

Important note: PINE Technology Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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