How Should Investors React To Sino Hua-An International Berhad's (KLSE:HUAAN) CEO Pay?

This article will reflect on the compensation paid to Guodong Liu who has served as CEO of Sino Hua-An International Berhad (KLSE:HUAAN) since 2007. This analysis will also assess whether Sino Hua-An International Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Sino Hua-An International Berhad

How Does Total Compensation For Guodong Liu Compare With Other Companies In The Industry?

At the time of writing, our data shows that Sino Hua-An International Berhad has a market capitalization of RM179m, and reported total annual CEO compensation of RM312k for the year to December 2019. That is, the compensation was roughly the same as last year. Notably, the salary of RM312k is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below RM811m, reported a median total CEO compensation of RM713k. That is to say, Guodong Liu is paid under the industry median. What's more, Guodong Liu holds RM12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. On a company level, Sino Hua-An International Berhad prefers to reward its CEO through a salary, opting not to pay Guodong Liu through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Sino Hua-An International Berhad's Growth Numbers

Sino Hua-An International Berhad has reduced its earnings per share by 89% a year over the last three years. It saw its revenue drop 57% 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. 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 Sino Hua-An International Berhad Been A Good Investment?

Given the total shareholder loss of 45% over three years, many shareholders in Sino Hua-An International Berhad are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Sino Hua-An International Berhad rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Guodong is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. It's tough to say that Guodong is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Sino Hua-An International Berhad (1 is significant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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