It's Unlikely That The CEO Of Synertone Communication Corporation (HKG:1613) Will See A Huge Pay Rise This Year

In the past three years, the share price of Synertone Communication Corporation (HKG:1613) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 27 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Synertone Communication

Comparing Synertone Communication Corporation's CEO Compensation With the industry

According to our data, Synertone Communication Corporation has a market capitalization of HK$388m, and paid its CEO total annual compensation worth HK$1.8m over the year to March 2021. This was the same as last year. Notably, the salary which is HK$1.44m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.8m. From this we gather that Weining Han is paid around the median for CEOs in the industry. What's more, Weining Han holds HK$80m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$1.4m	HK$1.4m	79%
Other	HK$378k	HK$378k	21%
Total Compensation	HK$1.8m	HK$1.8m	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Our data reveals that Synertone Communication allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Synertone Communication Corporation's Growth

Synertone Communication Corporation has seen its earnings per share (EPS) increase by 102% a year over the past three years. Its revenue is up 23% 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. 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 Synertone Communication Corporation Been A Good Investment?

With a total shareholder return of -36% over three years, Synertone Communication Corporation shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is potentially serious) in Synertone Communication we think you should know about.

Switching gears from Synertone Communication, 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.
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