Shareholders May Be More Conservative With JNBY Design Limited's (HKG:3306) CEO Compensation For Now

In the past three years, the share price of JNBY Design Limited (HKG:3306) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 21 October 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Our analysis indicates that 3306 is potentially undervalued!

Comparing JNBY Design Limited's CEO Compensation With The Industry

According to our data, JNBY Design Limited has a market capitalization of HK$3.5b, and paid its CEO total annual compensation worth CN¥21m over the year to June 2022. Notably, that's an increase of 39% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥3.3m.

In comparison with other companies in the industry with market capitalizations ranging from HK$1.6b to HK$6.3b, the reported median CEO total compensation was CN¥8.4m. This suggests that Huating Wu is paid more than the median for the industry. What's more, Huating Wu holds HK$28m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	CN¥3.3m	CN¥3.0m	16%
Other	CN¥18m	CN¥12m	84%
Total Compensation	CN¥21m	CN¥15m	100%

Talking in terms of the industry, salary represented approximately 93% of total compensation out of all the companies we analyzed, while other remuneration made up 7% of the pie. JNBY Design sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

JNBY Design Limited's Growth

JNBY Design Limited has seen its earnings per share (EPS) increase by 5.8% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.

We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has JNBY Design Limited Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in JNBY Design Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for JNBY Design that investors should be aware of in a dynamic business environment.

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.