This Is The Reason Why We Think Sprocomm Intelligence Limited's (HKG:1401) CEO Deserves A Bump Up To Their Compensation

Key Insights

• Sprocomm Intelligence to hold its Annual General Meeting on 30th of May
• Salary of CN¥552.0k is part of CEO Chengjun Li's total remuneration
• The total compensation is 35% less than the average for the industry
• Sprocomm Intelligence's EPS grew by 55% over the past three years while total shareholder return over the past three years was 64%

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The impressive results at Sprocomm Intelligence Limited (HKG:1401) recently will be great news for shareholders. This would be kept in mind at the upcoming AGM on 30th of May which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Sprocomm Intelligence

How Does Total Compensation For Chengjun Li Compare With Other Companies In The Industry?

According to our data, Sprocomm Intelligence Limited has a market capitalization of HK$1.4b, and paid its CEO total annual compensation worth CN¥580k over the year to December 2024. This means that the compensation hasn't changed much from last year. In particular, the salary of CN¥552.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Tech industry with market capitalizations ranging from HK$783m to HK$3.1b, the reported median CEO total compensation was CN¥899k. Accordingly, Sprocomm Intelligence pays its CEO under the industry median. Moreover, Chengjun Li also holds HK$285m worth of Sprocomm Intelligence stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6% is other remuneration. Sprocomm Intelligence is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Sprocomm Intelligence Limited's Growth Numbers

Over the past three years, Sprocomm Intelligence Limited has seen its earnings per share (EPS) grow by 55% per year. It achieved revenue growth of 3.3% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Sprocomm Intelligence Limited Been A Good Investment?

Most shareholders would probably be pleased with Sprocomm Intelligence Limited for providing a total return of 64% over three years. 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.

To Conclude...

Sprocomm Intelligence pays its CEO a majority of compensation through a salary. Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Sprocomm Intelligence you should be aware of, and 2 of them are a bit unpleasant.

Important note: Sprocomm Intelligence is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.