This article will reflect on the compensation paid to Jun Liu who has served as CEO of SIM Technology Group Limited (HKG:2000) since 2014. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for SIM Technology Group
Comparing SIM Technology Group Limited's CEO Compensation With the industry
According to our data, SIM Technology Group Limited has a market capitalization of HK$803m, and paid its CEO total annual compensation worth HK$1.3m over the year to December 2019. We note that's a small decrease of 5.4% on last year. In particular, the salary of HK$816.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. This suggests that Jun Liu is paid below the industry median. Moreover, Jun Liu also holds HK$335k worth of SIM Technology Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | HK$816k | HK$868k | 64% |
| Other | HK$453k | HK$473k | 36% |
| Total Compensation | HK$1.3m | HK$1.3m | 100% |
On an industry level, around 72% of total compensation represents salary and 28% is other remuneration. In SIM Technology Group's case, non-salary compensation represents a greater slice of total remuneration, 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 SIM Technology Group Limited's Growth Numbers
SIM Technology Group Limited has reduced its earnings per share by 69% a year over the last three years. It saw its revenue drop 8.0% over the last year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 SIM Technology Group Limited Been A Good Investment?
SIM Technology Group Limited has generated a total shareholder return of 2.6% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As we touched on above, SIM Technology Group Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Over the last three years, shareholder returns have been unexciting, and EPS growth has fared even worse. We can't categorize CEO compensation as high, but shareholders might object to a raise at this stage, considering overall poor performance.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for SIM Technology Group (1 is concerning!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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:2000
SIM Technology Group
An investment holding company, primarily designs, develops, manufactures, and sells handsets and Internet of Things (IOT) terminals in the People's Republic of China, Europe, the United States, and other Asian countries.
Flawless balance sheet with acceptable track record.
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