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Is Nanjing Sinolife United Company Limited's (HKG:3332) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2011 Yuan Zhang was appointed CEO of Nanjing Sinolife United Company Limited (HKG:3332). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Nanjing Sinolife United

How Does Yuan Zhang's Compensation Compare With Similar Sized Companies?

According to our data, Nanjing Sinolife United Company Limited has a market capitalization of HK$199m, and paid its CEO total annual compensation worth CN¥913k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CN¥225k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined a group of similar sized companies, with market capitalizations of below CN¥1.4b. The median CEO total compensation in that group is CN¥1.5m.

Most shareholders would consider it a positive that Yuan Zhang takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Nanjing Sinolife United, below.

SEHK:3332 CEO Compensation, December 4th 2019

Is Nanjing Sinolife United Company Limited Growing?

Over the last three years Nanjing Sinolife United Company Limited has shrunk its earnings per share by an average of 122% per year (measured with a line of best fit). Its revenue is down 14% 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. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Nanjing Sinolife United Company Limited Been A Good Investment?

Given the total loss of 87% over three years, many shareholders in Nanjing Sinolife United Company Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It looks like Nanjing Sinolife United Company Limited pays its CEO less than similar sized companies.

Yuan Zhang is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Whatever your view on compensation, you might want to check if insiders are buying or selling Nanjing Sinolife United shares (free trial).

If you want to buy a stock that is better than Nanjing Sinolife United, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.