Shareholders Will Probably Hold Off On Increasing China YuHua Education Corporation Limited's (HKG:6169) CEO Compensation For The Time Being

The underwhelming share price performance of China YuHua Education Corporation Limited (HKG:6169) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 24 January 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for China YuHua Education

Comparing China YuHua Education Corporation Limited's CEO Compensation With the industry

Our data indicates that China YuHua Education Corporation Limited has a market capitalization of HK$8.2b, and total annual CEO compensation was reported as CN¥3.2m for the year to August 2021. We note that's a decrease of 40% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥961k.

In comparison with other companies in the industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was CN¥3.6m. From this we gather that Hua Li is paid around the median for CEOs in the industry. What's more, Hua Li holds HK$57m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	CN¥961k	CN¥360k	30%
Other	CN¥2.2m	CN¥4.9m	70%
Total Compensation	CN¥3.2m	CN¥5.2m	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. China YuHua Education pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at China YuHua Education Corporation Limited's Growth Numbers

China YuHua Education Corporation Limited has seen its earnings per share (EPS) increase by 42% a year over the past three years. It achieved revenue growth of 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has China YuHua Education Corporation Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in China YuHua Education Corporation Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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 CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for China YuHua Education that investors should be aware of in a dynamic business environment.

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.