Is SIM Technology Group Limited’s (HKG:2000) CEO Pay Fair?

Jun Liu became the CEO of SIM Technology Group Limited (HKG:2000) in 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for SIM Technology Group

How Does Jun Liu’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that SIM Technology Group Limited has a market cap of HK$602m, and reported total annual CEO compensation of HK$1.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$868k. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.8m.

Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. So it seems like there isn’t a significant difference between SIM Technology Group and the broader market, in terms of salary allocation in the overall compensation package.

So Jun Liu receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. You can see a visual representation of the CEO compensation at SIM Technology Group, below.

SEHK:2000 CEO Compensation May 11th 2020

Is SIM Technology Group Limited Growing?

SIM Technology Group Limited has reduced its earnings per share by an average of 41% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 45%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. 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 you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has SIM Technology Group Limited Been A Good Investment?

Since shareholders would have lost about 18% over three years, some SIM Technology Group Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

Jun Liu is paid around the same as most CEOs of similar size companies.

The company isn’t growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Shifting gears from CEO pay for a second, we’ve spotted 3 warning signs for SIM Technology Group you should be aware of, and 1 of them shouldn’t be ignored.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

Source Article