Increases to Want Want China Holdings Limited's (HKG:151) CEO Compensation Might Cool off for now

In the past three years, shareholders of Want Want China Holdings Limited (HKG:151) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 17 August 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Want Want China Holdings

Comparing Want Want China Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Want Want China Holdings Limited has a market capitalization of HK$64b, and reported total annual CEO compensation of CN¥123m for the year to March 2021. That's a notable increase of 51% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥1.0m.

For comparison, other companies in the same industry with market capitalizations ranging between HK$31b and HK$93b had a median total CEO compensation of CN¥6.8m. Accordingly, our analysis reveals that Want Want China Holdings Limited pays Eng-Meng Tsai north of the industry median. Furthermore, Eng-Meng Tsai directly owns HK$35b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	CN¥1.0m	CN¥1.0m	1%
Other	CN¥122m	CN¥81m	99%
Total Compensation	CN¥123m	CN¥82m	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Eng-Meng Tsai as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Want Want China Holdings Limited's Growth

Over the past three years, Want Want China Holdings Limited has seen its earnings per share (EPS) grow by 11% per year. It achieved revenue growth of 9.5% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Want Want China Holdings Limited Been A Good Investment?

Since shareholders would have lost about 1.1% over three years, some Want Want China Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Want Want China Holdings prefers rewarding its CEO through non-salary benefits. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Want Want China Holdings that you should be aware of before investing.

Switching gears from Want Want China Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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