We Think Shareholders May Want To Consider A Review Of Bank of Zhengzhou Co., Ltd.'s (HKG:6196) CEO Compensation Package

Bank of Zhengzhou Co., Ltd. (HKG:6196) has not performed well recently and CEO Xueqing Shen will probably need to up their game. At the upcoming AGM on 17 June 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Bank of Zhengzhou

How Does Total Compensation For Xueqing Shen Compare With Other Companies In The Industry?

According to our data, Bank of Zhengzhou Co., Ltd. has a market capitalization of HK$30b, and paid its CEO total annual compensation worth CN¥1.7m over the year to December 2020. That's a slight decrease of 3.9% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥838k.

On examining similar-sized companies in the industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was CN¥1.7m. So it looks like Bank of Zhengzhou compensates Xueqing Shen in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	CN¥838k	CN¥830k	48%
Other	CN¥894k	CN¥973k	52%
Total Compensation	CN¥1.7m	CN¥1.8m	100%

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. It's interesting to note that Bank of Zhengzhou allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Bank of Zhengzhou Co., Ltd.'s Growth Numbers

Over the last three years, Bank of Zhengzhou Co., Ltd. has shrunk its earnings per share by 17% per year. It saw its revenue drop 1.4% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Bank of Zhengzhou Co., Ltd. Been A Good Investment?

With a total shareholder return of -42% over three years, Bank of Zhengzhou Co., Ltd. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 3 warning signs for Bank of Zhengzhou you should be aware of, and 2 of them are a bit concerning.

Switching gears from Bank of Zhengzhou, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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