Here's Why We Think China 21st Century Education Group Limited's (HKG:1598) CEO Compensation Looks Fair

Key Insights

• China 21st Century Education Group to hold its Annual General Meeting on 28th of June
• Total pay for CEO Hongwei Liu includes CN¥186.0k salary
• The total compensation is 74% less than the average for the industry
• China 21st Century Education Group's three-year loss to shareholders was 77% while its EPS was down 19% over the past three years

Performance at China 21st Century Education Group Limited (HKG:1598) has been rather uninspiring recently and shareholders may be wondering how CEO Hongwei Liu plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 28th of June. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for China 21st Century Education Group

Comparing China 21st Century Education Group Limited's CEO Compensation With The Industry

According to our data, China 21st Century Education Group Limited has a market capitalization of HK$151m, and paid its CEO total annual compensation worth CN¥428k over the year to December 2023. That's a notable decrease of 27% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥186k.

On comparing similar-sized companies in the Hong Kong Consumer Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.7m. That is to say, Hongwei Liu is paid under the industry median. Moreover, Hongwei Liu also holds HK$84k worth of China 21st Century Education Group 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¥186k	CN¥154k	43%
Other	CN¥242k	CN¥435k	57%
Total Compensation	CN¥428k	CN¥589k	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. China 21st Century Education Group pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at China 21st Century Education Group Limited's Growth Numbers

Over the last three years, China 21st Century Education Group Limited has shrunk its earnings per share by 19% per year. It achieved revenue growth of 35% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China 21st Century Education Group Limited Been A Good Investment?

Few China 21st Century Education Group Limited shareholders would feel satisfied with the return of -77% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The poor performance of the share price might have something to do with the lack of earnings growth. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for China 21st Century Education Group you should be aware of, and 2 of them are potentially serious.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com