What has SINO’s performance been like?Earnings is a powerful indication of SINO’s ability to invest shareholders’ funds and generate returns. Therefore I will use earnings as a proxy of Cao’s performance in the past year. Over the last year SINO produced a profit of US$3.00M , which is an increase of 238.11% from its last year’s earnings of US$887.63K. This could be a sign of a successful turnaround since SINO has not always been profitable, given its average EPS of -US$0.093 over the past five years. Given earnings are moving the right way, CEO pay should mirror Cao’s value creation for shareholders. During the same period, Cao’s total remuneration dropped by a significant rate of -46.90%, to US$180.00K.
Is SINO’s CEO overpaid relative to the market?
Even though no standard benchmark exists, as remuneration should be tailored to the specific company and market, we can estimate a high-level benchmark to see if SINO deviates substantially from its peers. This outcome can help shareholders ask the right question about Cao’s incentive alignment. On average, a US small-cap has a value of $1B, produces earnings of $96M, and remunerates its CEO circa $2.7M per annum. Taking into account the size of SINO in terms of market cap, as well as its performance, using earnings as a proxy, it appears that Cao is paid on a similar level to the average US small-cap CEO This could mean Cao is paid a suitable level.
Board members are the voice of shareholders. Although CEO pay doesn’t necessarily make a big dent in your investment thesis in SINO, proper governance on behalf of your investment should be a key concern. These decisions made by top management and directors flow down into financials which impact returns to investors. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Governance: To find out more about SINO’s governance, look through our infographic report of the company’s board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SINO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!