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What We Learned About Sunland Group's (ASX:SDG) CEO Compensation

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·4-min read
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This article will reflect on the compensation paid to Sahba Abedian who has served as CEO of Sunland Group Limited (ASX:SDG) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Sunland Group.

Check out our latest analysis for Sunland Group

Comparing Sunland Group Limited's CEO Compensation With the industry

According to our data, Sunland Group Limited has a market capitalization of AU$327m, and paid its CEO total annual compensation worth AU$827k over the year to June 2020. We note that's an increase of 11% above last year. In particular, the salary of AU$805.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$127m and AU$508m had a median total CEO compensation of AU$561k. Hence, we can conclude that Sahba Abedian is remunerated higher than the industry median. Furthermore, Sahba Abedian directly owns AU$22m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

AU$805k

AU$724k

97%

Other

AU$21k

AU$21k

3%

Total Compensation

AU$827k

AU$744k

100%

On an industry level, around 81% of total compensation represents salary and 19% is other remuneration. Sunland Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Sunland Group Limited's Growth Numbers

Over the last three years, Sunland Group Limited has shrunk its earnings per share by 57% per year. It saw its revenue drop 42% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sunland Group Limited Been A Good Investment?

We think that the total shareholder return of 65%, over three years, would leave most Sunland Group Limited 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...

Sunland Group pays its CEO a majority of compensation through a salary. As we touched on above, Sunland Group Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. So while we don't think, Sahba is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Sunland Group (1 is significant!) that you should be aware of before investing here.

Important note: Sunland Group 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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