Should shareholders reconsider the CEO compensation package of Sunshine 100 China Holdings Ltd (HKG: 2608)?


Sunshine 100 China Holdings Ltd (HKG: 2608) hasn’t performed well recently and CEO Xiaodi Yi will likely have to improve his game. At the next AGM on June 25, 2021, shareholders will be able to hear from the board of directors, including their plans to turn things around. performance. It would also be an opportunity for shareholders to influence management by voting on corporate resolutions such as executive compensation, which could have a significant impact on the company. We present the reasons why we believe that CEO compensation is not in line with company performance.

Check out our latest review for Sunshine 100 China Holdings

How does Xiaodi Yi’s total compensation compare to that of other companies in the industry?

Our data indicates that Sunshine 100 China Holdings Ltd has a market cap of HK $ 3.1 billion and the CEO’s total annual compensation was reported at CN 1.9 million for the year up to December 2020. This is notably a decrease of 9.1% compared to the previous year. In particular, the salary of CN151.15m, constitutes a fairly large part of the total compensation paid to the CEO.

Compared to other companies in the industry with market capitalizations ranging from HK $ 1.6 billion to HK $ 6.2 billion, the median total CEO compensation was CND 2.4 million. So it looks like Sunshine 100 China Holdings is compensating Xiaodi Yi in line with the industry median.

Component 2020 2019 Proportion (2020)
Salary CN ¥ 1.2m CN ¥ 1.2m 59%
Other CN ¥ 785k CN4884k 41%
Total compensation CN ¥ 1.9m CN ¥ 2.1m 100%

At the industry level, around 69% of total compensation is salary and 31% other compensation. Interestingly, Sunshine 100 China Holdings allocates a smaller portion of pay to salary compared to the industry as a whole. If salary is the primary component of total compensation, this suggests that the CEO receives a higher fixed proportion of total compensation, regardless of performance.

SEHK: 2,608 CEO compensation June 18, 2021

Growth of Sunshine 100 China Holdings Ltd

Sunshine 100 China Holdings Ltd has reduced its earnings per share by 12% per year over the past three years. Last year, its turnover fell by 31%.

Overall, this is not a very positive result for shareholders. And the impression is worse when you consider that revenues are declining year over year. So given this relatively poor performance, shareholders probably wouldn’t want high CEO compensation. While we don’t have analyst forecasts, you might want to rate this data-rich visualization of earnings, revenue, and cash flow.

Sunshine 100 China Holdings Ltd Was a Good Investment?

With a total shareholder return of -49% over three years, shareholders of Sunshine 100 China Holdings Ltd would be generally disappointed. Therefore, it could be upsetting for shareholders if the CEO is paid generously.

In summary…

Given that shareholders haven’t seen any positive return on their investment, let alone the lack of earnings growth, this may suggest that few of them would be willing to give the CEO a raise. At the next AGM, they will be able to question management’s plans and strategies to redress performance and reassess their investment thesis vis-à-vis the company.

We can learn a lot about a business by studying its CEO compensation trends, as well as looking at other aspects of the business. In our study, we found 3 warning signs for Sunshine 100 China Holdings you need to be aware of it, and one of them is of concern.

Switch gears from Sunshine 100 China Holdings, if you are looking for a clean balance sheet and superior returns, this free List of high yield, low leverage companies is a great place to look.

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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 material. Simply Wall St has no position in the mentioned stocks.
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