How Does Huazhang Technology Holding's (HKG:1673) CEO Pay Compare With Company Performance?

Ai Yan Wang has been the CEO of Huazhang Technology Holding Limited (HKG:1673) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Huazhang Technology Holding.

Check out our latest analysis for Huazhang Technology Holding

How Does Total Compensation For Ai Yan Wang Compare With Other Companies In The Industry?

Our data indicates that Huazhang Technology Holding Limited has a market capitalization of HK$572m, and total annual CEO compensation was reported as CN¥1.1m for the year to June 2020. That's just a smallish increase of 5.7% on last year. Notably, the salary which is CN¥822.4k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.1m. So it looks like Huazhang Technology Holding compensates Ai Yan Wang in line with the median for the industry.

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. There isn't a significant difference between Huazhang Technology Holding and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Huazhang Technology Holding Limited's Growth Numbers

Huazhang Technology Holding Limited has reduced its earnings per share by 66% a year over the last three years. Its revenue is down 26% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Huazhang Technology Holding Limited Been A Good Investment?

With a three year total loss of 79% for the shareholders, Huazhang Technology Holding Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Huazhang Technology Holding pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Huazhang Technology Holding you should be aware of, and 1 of them shouldn't be ignored.

Important note: Huazhang Technology Holding 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. 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.
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