We Discuss Why Zhi Sheng Group Holdings Limited's (HKG:8370) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• Zhi Sheng Group Holdings' Annual General Meeting to take place on 14th of October
• CEO Cong Yi's total compensation includes salary of CN¥480.0k
• The total compensation is 68% less than the average for the industry
• Zhi Sheng Group Holdings' EPS declined by 26% over the past three years while total shareholder loss over the past three years was 81%

The underwhelming performance at Zhi Sheng Group Holdings Limited (HKG:8370) recently has probably not pleased shareholders. At the upcoming AGM on 14th of October, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for Zhi Sheng Group Holdings

How Does Total Compensation For Cong Yi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zhi Sheng Group Holdings Limited has a market capitalization of HK$63m, and reported total annual CEO compensation of CN¥523k for the year to June 2024. We note that's a small decrease of 7.1% on last year. We note that the salary portion, which stands at CN¥480.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.6m. This suggests that Cong Yi is paid below the industry median. Furthermore, Cong Yi directly owns HK$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	CN¥480k	CN¥480k	92%
Other	CN¥43k	CN¥83k	8%
Total Compensation	CN¥523k	CN¥563k	100%

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. Zhi Sheng Group Holdings pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Zhi Sheng Group Holdings Limited's Growth

Zhi Sheng Group Holdings Limited has reduced its earnings per share by 26% a year over the last three years. In the last year, its revenue is down 48%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Zhi Sheng Group Holdings Limited Been A Good Investment?

With a total shareholder return of -81% over three years, Zhi Sheng Group Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

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 Zhi Sheng Group Holdings you should be aware of, and 2 of them make us uncomfortable.

Important note: Zhi Sheng Group Holdings 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. 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.