Here's Why Dadi Education Holdings Limited's (HKG:8417) CEO Compensation Is The Least Of Shareholders Concerns

The performance at Dadi Education Holdings Limited (HKG:8417) has been rather lacklustre of late and shareholders may be wondering what CEO Patrick Mok is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 20 August 2021. 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 have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Dadi Education Holdings

How Does Total Compensation For Patrick Mok Compare With Other Companies In The Industry?

Our data indicates that Dadi Education Holdings Limited has a market capitalization of HK$54m, and total annual CEO compensation was reported as HK$700k for the year to March 2021. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$630.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.3m. In other words, Dadi Education Holdings pays its CEO lower than the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$630k	HK$632k	90%
Other	HK$70k	HK$71k	10%
Total Compensation	HK$700k	HK$703k	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. There isn't a significant difference between Dadi Education Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Dadi Education Holdings Limited's Growth Numbers

Dadi Education Holdings Limited's earnings per share (EPS) grew 139% per year over the last three years. Its revenue is down 22% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Dadi Education Holdings Limited Been A Good Investment?

The return of -77% over three years would not have pleased Dadi Education Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which shouldn't be ignored) in Dadi Education Holdings we think you should know about.

Important note: Dadi Education 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.
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