This Is Why We Think Sinotrans Limited's (HKG:598) CEO Might Get A Pay Rise Approved By Shareholders

Key Insights

• Sinotrans to hold its Annual General Meeting on 7th of June
• CEO Rong Song's total compensation includes salary of CN¥985.2k
• Total compensation is 84% below industry average
• Over the past three years, Sinotrans' EPS grew by 7.6% and over the past three years, the total shareholder return was 54%

Shareholders will be pleased by the robust performance of Sinotrans Limited (HKG:598) recently and this will be kept in mind in the upcoming AGM on 7th of June. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for Sinotrans

How Does Total Compensation For Rong Song Compare With Other Companies In The Industry?

Our data indicates that Sinotrans Limited has a market capitalization of HK$43b, and total annual CEO compensation was reported as CN¥2.3m for the year to December 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥985k.

In comparison with other companies in the Hong Kong Logistics industry with market capitalizations ranging from HK$31b to HK$94b, the reported median CEO total compensation was CN¥14m. That is to say, Rong Song is paid under the industry median. Moreover, Rong Song also holds HK$426k worth of Sinotrans stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥985k	CN¥921k	43%
Other	CN¥1.3m	CN¥1.3m	57%
Total Compensation	CN¥2.3m	CN¥2.2m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. It's interesting to note that Sinotrans allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Sinotrans Limited's Growth

Over the past three years, Sinotrans Limited has seen its earnings per share (EPS) grow by 7.6% per year. In the last year, its revenue is up 1.4%.

We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Sinotrans Limited Been A Good Investment?

We think that the total shareholder return of 54%, over three years, would leave most Sinotrans Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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. We've identified 1 warning sign for Sinotrans that investors should be aware of in a dynamic business environment.

Important note: Sinotrans 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. 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.