Shareholders Will Probably Hold Off On Increasing Shuanghua Holdings Limited's (HKG:1241) CEO Compensation For The Time Being

Key Insights

• Shuanghua Holdings' Annual General Meeting to take place on 28th of June
• CEO Ping Zheng's total compensation includes salary of CN¥1.00m
• The total compensation is 57% higher than the average for the industry
• Shuanghua Holdings' three-year loss to shareholders was 34% while its EPS was down 28% over the past three years

Shareholders of Shuanghua Holdings Limited (HKG:1241) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 28th of June will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Shuanghua Holdings

How Does Total Compensation For Ping Zheng Compare With Other Companies In The Industry?

According to our data, Shuanghua Holdings Limited has a market capitalization of HK$40m, and paid its CEO total annual compensation worth CN¥1.1m over the year to December 2023. This was the same amount the CEO received in the prior year. Notably, the salary which is CN¥1.00m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Auto Components industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥713k. Accordingly, our analysis reveals that Shuanghua Holdings Limited pays Ping Zheng north of the industry median. What's more, Ping Zheng holds HK$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.0m	CN¥1.0m	89%
Other	CN¥120k	CN¥120k	11%
Total Compensation	CN¥1.1m	CN¥1.1m	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. Shuanghua Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Shuanghua Holdings Limited's Growth

Over the last three years, Shuanghua Holdings Limited has shrunk its earnings per share by 28% per year. It achieved revenue growth of 393% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Shuanghua Holdings Limited Been A Good Investment?

With a total shareholder return of -34% over three years, Shuanghua Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Shuanghua Holdings that investors should look into moving forward.

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

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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.

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