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How Should Investors React To Shuanghua Holdings Limited's (HKG:1241) CEO Pay?

Simply Wall St

The CEO of Shuanghua Holdings Limited (HKG:1241) is Ping Zheng. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.

Check out our latest analysis for Shuanghua Holdings

How Does Ping Zheng's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Shuanghua Holdings Limited has a market cap of HK$142m, and is paying total annual CEO compensation of CN¥3.1m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥1.0m. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO total compensation was CN¥1.8m.

As you can see, Ping Zheng is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Shuanghua Holdings Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

SEHK:1241 CEO Compensation, September 16th 2019

Is Shuanghua Holdings Limited Growing?

Shuanghua Holdings Limited has reduced its earnings per share by an average of 14% a year, over the last three years (measured with a line of best fit). Its revenue is down -46% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Shuanghua Holdings Limited Been A Good Investment?

Since shareholders would have lost about 62% over three years, some Shuanghua Holdings Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Shuanghua Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Shuanghua Holdings shares (free trial).

Important note: Shuanghua Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.