How Is China Huajun Group's (HKG:377) CEO Paid Relative To Peers?

Ye Zhang became the CEO of China Huajun Group Limited (HKG:377) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for China Huajun Group

Comparing China Huajun Group Limited's CEO Compensation With the industry

Our data indicates that China Huajun Group Limited has a market capitalization of HK$584m, and total annual CEO compensation was reported as CN¥2.2m for the year to December 2019. Notably, that's an increase of 14% over the year before. Notably, the salary which is CN¥2.08m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥2.1m. This suggests that China Huajun Group remunerates its CEO largely in line with the industry average.

Speaking on an industry level, nearly 92% of total compensation represents salary, while the remainder of 7.7% is other remuneration. China Huajun Group has gone down a largely traditional route, paying Ye Zhang a high salary, giving it preference over non-salary benefits. 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.

China Huajun Group Limited's Growth

China Huajun Group Limited has reduced its earnings per share by 35% a year over the last three years. In the last year, its revenue is down 3.3%.

The decline in EPS is a bit concerning. 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. 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 China Huajun Group Limited Been A Good Investment?

With a three year total loss of 78% for the shareholders, China Huajun Group Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

China Huajun Group pays its CEO a majority of compensation through a salary. As previously discussed, Ye is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for China Huajun Group (1 is potentially serious!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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