Here’s why we think Sisram Medical Ltd CEO compensation (HKG: 1696) seems fair

Performance at Sisram Medical Ltée (HKG: 1696) has been rather lackluster lately and shareholders may be wondering what CEO Lior Dayan is planning to do about it. They will have the opportunity to exercise their voting rights to influence the future direction of the company at the next AGM on June 30, 2021. It has been shown that setting an appropriate compensation for executives prompts management to act in the interests of shareholders. We believe the CEO compensation seems appropriate given the data we’ve gathered.

Discover our latest analysis for Sisram Medical

Sisram Medical Ltd CEO Compensation Comparison with Industry

According to our data, Sisram Medical Ltd has a market capitalization of 6.8 billion Hong Kong dollars and paid its CEO a total annual compensation of 769,000 US dollars during the year until December 2020. It is is largely stable compared to the compensation of the previous year. We note that the salary portion, which amounts to US $ 596.0K, constitutes the majority of the total compensation received by the CEO.

Comparing similar companies in the same industry with market caps ranging from HK $ 3.1 billion to HK $ 12 billion, we found that the median total CEO compensation was $ 2.1 million. That is, Lior Dayan is paid below the industry median. In addition, Lior Dayan owns Hong Kong $ 1.7 million in shares of the company in his own name.

Component 2020 2019 Proportion (2020)
Salary US $ 596,000 US $ 606,000 78%
Other $ 173,000 US $ 153,000 22%
Total compensation US $ 769,000 US $ 759,000 100%

Speaking of the industry as a whole, salaries and other compensation account for about 50% each of total compensation. Sisram Medical pays a higher share of its compensation through salary compared to the industry as a whole. If salary dominates total compensation, this suggests that CEO compensation leans less towards the variable portion, which is generally performance-related.

SEHK: 1,696 CEO compensation June 25, 2021

A look at the growth figures of Sisram Medical Ltd

Over the past three years, Sisram Medical Ltd has reduced its earnings per share by 8.0% per year. He has seen his income drop 6.5% in the past year.

Few shareholders would be happy to read that EPS has declined. And the impression is worse when you consider that revenues are declining year over year. These factors suggest that the performance of the company would not really justify a high salary for the CEO. While we don’t have an analyst forecast for the company, shareholders might want to take a look at this detailed historical chart of earnings, income and cash flow.

Has Sisram Medical Ltd been a good investment?

We believe that the total shareholder return of 226%, over three years, would put a smile on the face of most shareholders of Sisram Medical Ltd. So they might not be affected at all if the CEO were to be paid more than is normal for companies of the same size.

In summary…

While the return to shareholders looks promising, it’s hard to ignore the lack of earnings growth and it makes us wonder if these strong returns can continue. These concerns could be directed to the board of directors and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation can have a huge impact on performance, but it’s only one element. We have identified 2 warning signs for Sisram Medical which investors should be aware of in a dynamic business environment.

Arguably, the quality of the company is much more important than the compensation levels of CEOs. So look at this free list of interesting companies that have a HIGH return on equity and low leverage.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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