Does 3SBio Inc.'s (HKG:1530) CEO Salary Reflect Performance?

Jing Lou is the CEO of 3SBio Inc. (HKG:1530). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for 3SBio

How Does Jing Lou's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that 3SBio Inc. has a market cap of HK$35b, and reported total annual CEO compensation of CN¥6.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CN¥432k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from CN¥14b to CN¥45b, we found the median CEO total compensation was CN¥3.5m.

As you can see, Jing Lou is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean 3SBio Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at 3SBio has changed over time.

SEHK:1530 CEO Compensation, November 12th 2019
SEHK:1530 CEO Compensation, November 12th 2019

Is 3SBio Inc. Growing?

3SBio Inc. has increased its earnings per share (EPS) by an average of 23% a year, over the last three years (using a line of best fit). It achieved revenue growth of 20% over the last year.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has 3SBio Inc. Been A Good Investment?

I think that the total shareholder return of 79%, over three years, would leave most 3SBio Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by 3SBio Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling 3SBio (free visualization of insider trades).

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

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.