Why Smart-Core Holdings' (HKG:2166) CEO Pay Matters

Weidong Tian is the CEO of Smart-Core Holdings Limited (HKG:2166), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. 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 Smart-Core Holdings

Comparing Smart-Core Holdings Limited's CEO Compensation With the industry

Our data indicates that Smart-Core Holdings Limited has a market capitalization of HK$638m, and total annual CEO compensation was reported as HK$1.3m for the year to December 2019. That's a slight decrease of 3.6% on the prior year. Notably, the salary which is HK$1.08m, 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$1.9m. From this we gather that Weidong Tian is paid around the median for CEOs in the industry. Furthermore, Weidong Tian directly owns HK$341m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. Smart-Core Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Smart-Core Holdings Limited's Growth

Over the last three years, Smart-Core Holdings Limited has shrunk its earnings per share by 12% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Smart-Core Holdings Limited Been A Good Investment?

With a three year total loss of 13% for the shareholders, Smart-Core Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Weidong is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

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 a bit unpleasant) in Smart-Core Holdings we think you should know about.

Important note: Smart-Core 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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