Is Sino Splendid Holdings Limited's (HKG:8006) CEO Being Overpaid?

Simply Wall St

Mon, Jun 10, 2019, 12:46 AM

Chi Wa Chow has been the CEO of Sino Splendid Holdings Limited (HKG:8006) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Sino Splendid Holdings

How Does Chi Wa Chow's Compensation Compare With Similar Sized Companies?

Our data indicates that Sino Splendid Holdings Limited is worth HK$61m, and total annual CEO compensation is HK$1.1m. (This number is for the twelve months until December 2018). We note that's an increase of 815% above last year. We think total compensation is more important but we note that the CEO salary is lower, at HK$720k. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at Sino Splendid Holdings, below.

SEHK:8006 CEO Compensation, June 10th 2019

Is Sino Splendid Holdings Limited Growing?

Over the last three years Sino Splendid Holdings Limited has shrunk its earnings per share by an average of 56% per year (measured with a line of best fit). It achieved revenue growth of 14% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Splendid Holdings Limited Been A Good Investment?

With a three year total loss of 57%, Sino Splendid Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.