Shareholders Will Probably Not Have Any Issues With Virscend Education Company Limited's (HKG:1565) CEO Compensation

Key Insights

• Virscend Education to hold its Annual General Meeting on 26th of January
• Salary of CN¥898.0k is part of CEO Yude Yan's total remuneration
• The overall pay is 42% below the industry average
• Virscend Education's EPS declined by 53% over the past three years while total shareholder loss over the past three years was 93%

The performance at Virscend Education Company Limited (HKG:1565) has been rather lacklustre of late and shareholders may be wondering what CEO Yude Yan is planning to do about this. At the next AGM coming up on 26th of January, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Virscend Education

Comparing Virscend Education Company Limited's CEO Compensation With The Industry

According to our data, Virscend Education Company Limited has a market capitalization of HK$432m, and paid its CEO total annual compensation worth CN¥898k over the year to August 2023. That's a modest increase of 7.8% on the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥898k.

For comparison, other companies in the Hong Kong Consumer Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.6m. Accordingly, Virscend Education pays its CEO under the industry median. Moreover, Yude Yan also holds HK$211m worth of Virscend Education stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥898k	CN¥833k	100%
Other	-	-	-
Total Compensation	CN¥898k	CN¥833k	100%

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. On a company level, Virscend Education prefers to reward its CEO through a salary, opting not to pay Yude Yan through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Virscend Education Company Limited's Growth

Virscend Education Company Limited has reduced its earnings per share by 53% a year over the last three years. Its revenue is up 38% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Virscend Education Company Limited Been A Good Investment?

With a total shareholder return of -93% over three years, Virscend Education Company Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Virscend Education rewards its CEO solely through a salary, ignoring non-salary benefits completely. The loss to shareholders over the past three years is certainly concerning. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Virscend Education you should be aware of, and 2 of them make us uncomfortable.

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.