We Discuss Why China Putian Food Holding Limited's (HKG:1699) CEO Compensation May Be Closely Reviewed

China Putian Food Holding Limited (HKG:1699) has not performed well recently and CEO Chenyang Cai will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 06 August 2021. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for China Putian Food Holding

Comparing China Putian Food Holding Limited's CEO Compensation With the industry

According to our data, China Putian Food Holding Limited has a market capitalization of HK$187m, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2020. We note that's an increase of 36% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥240k.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.6m. From this we gather that Chenyang Cai is paid around the median for CEOs in the industry.

Component	2020	2019	Proportion (2020)
Salary	CN¥240k	CN¥368k	18%
Other	CN¥1.1m	CN¥596k	82%
Total Compensation	CN¥1.3m	CN¥964k	100%

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. China Putian Food Holding sets aside a smaller share of compensation for salary, in comparison to the overall 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 Putian Food Holding Limited's Growth Numbers

Over the last three years, China Putian Food Holding Limited has shrunk its earnings per share by 7.0% per year. In the last year, its revenue changed by just 0.7%.

Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has China Putian Food Holding Limited Been A Good Investment?

The return of -56% over three years would not have pleased China Putian Food Holding Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in China Putian Food Holding we think you should know about.

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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