Increases to Chen Lin Education Group Holdings Limited's (HKG:1593) CEO Compensation Might Cool off for now

Key Insights

• Chen Lin Education Group Holdings' Annual General Meeting to take place on 25th of February
• Total pay for CEO Yulin Huang includes CN¥2.88m salary
• The total compensation is 103% higher than the average for the industry
• Over the past three years, Chen Lin Education Group Holdings' EPS grew by 82% and over the past three years, the total loss to shareholders 34%

The underwhelming share price performance of Chen Lin Education Group Holdings Limited (HKG:1593) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of February could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Chen Lin Education Group Holdings

How Does Total Compensation For Yulin Huang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chen Lin Education Group Holdings Limited has a market capitalization of HK$1.4b, and reported total annual CEO compensation of CN¥5.1m for the year to August 2024. That's mostly flat as compared to the prior year's compensation. In particular, the salary of CN¥2.88m, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Consumer Services industry with market caps ranging from HK$778m to HK$3.1b, we found that the median CEO total compensation was CN¥2.5m. This suggests that Yulin Huang is paid more than the median for the industry. Furthermore, Yulin Huang directly owns HK$775m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. In Chen Lin Education Group Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Chen Lin Education Group Holdings Limited's Growth

Chen Lin Education Group Holdings Limited has seen its earnings per share (EPS) increase by 82% a year over the past three years. It achieved revenue growth of 6.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Chen Lin Education Group Holdings Limited Been A Good Investment?

With a total shareholder return of -34% over three years, Chen Lin Education Group Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 did our research and identified 4 warning signs (and 3 which are concerning) in Chen Lin Education Group Holdings we think you should know about.

Important note: Chen Lin Education 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.