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Does Shineco, Inc.'s (NASDAQ:TYHT) CEO Pay Compare Well With Peers?

Simply Wall St
·3-min read

Yuying Zhang is the CEO of Shineco, Inc. (NASDAQ:TYHT). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Shineco

How Does Yuying Zhang's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Shineco, Inc. has a market cap of US$11m, and reported total annual CEO compensation of US$151k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at US$120k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$607k.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Shineco. Talking in terms of the sector, salary represented approximately 63% of total compensation out of all the companies we analysed, while other remuneration made up 37% of the pie. So it seems like there isn't a significant difference between Shineco and the broader market, in terms of salary allocation in the overall compensation package.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. You can see a visual representation of the CEO compensation at Shineco, below.

NasdaqCM:TYHT CEO Compensation April 22nd 2020
NasdaqCM:TYHT CEO Compensation April 22nd 2020

Is Shineco, Inc. Growing?

Shineco, Inc. has reduced its earnings per share by an average of 67% a year, over the last three years (measured with a line of best fit). It saw its revenue drop 20% over the last year.

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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shineco, Inc. Been A Good Investment?

Since shareholders would have lost about 91% over three years, some Shineco, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It looks like Shineco, Inc. pays its CEO less than similar sized companies.

The compensation paid to Yuying Zhang is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. On another note, Shineco has 4 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Important note: Shineco may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.