We Think China Yurun Food Group Limited's (HKG:1068) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• China Yurun Food Group to hold its Annual General Meeting on 18th of June
• Salary of HK$1.31m is part of CEO Yuan Zhu's total remuneration
• The total compensation is 51% higher than the average for the industry
• Over the past three years, China Yurun Food Group's EPS fell by 25% and over the past three years, the total loss to shareholders 85%

China Yurun Food Group Limited (HKG:1068) has not performed well recently and CEO Yuan Zhu will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 18th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for China Yurun Food Group

How Does Total Compensation For Yuan Zhu Compare With Other Companies In The Industry?

Our data indicates that China Yurun Food Group Limited has a market capitalization of HK$272m, and total annual CEO compensation was reported as HK$2.0m for the year to December 2023. This was the same as last year. We note that the salary portion, which stands at HK$1.31m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Food industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.3m. This suggests that Yuan Zhu is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.3m	HK$1.3m	66%
Other	HK$689k	HK$689k	34%
Total Compensation	HK$2.0m	HK$2.0m	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. China Yurun Food Group pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at China Yurun Food Group Limited's Growth Numbers

China Yurun Food Group Limited has reduced its earnings per share by 25% a year over the last three years. It saw its revenue drop 35% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Yurun Food Group Limited Been A Good Investment?

The return of -85% over three years would not have pleased China Yurun Food Group Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for China Yurun Food Group (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.