It May Be Possible That Natural Food International Holding Limited's (HKG:1837) CEO Compensation Could Get Bumped Up

Key Insights

• Natural Food International Holding will host its Annual General Meeting on 31st of May
• CEO Zejun Zhang's total compensation includes salary of CN¥975.0k
• Total compensation is 42% below industry average
• Natural Food International Holding's EPS grew by 47% over the past three years while total shareholder return over the past three years was 11%

Shareholders will probably not be disappointed by the robust results at Natural Food International Holding Limited (HKG:1837) recently and they will be keeping this in mind as they go into the AGM on 31st of May. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for Natural Food International Holding

Comparing Natural Food International Holding Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Natural Food International Holding Limited has a market capitalization of HK$1.3b, and reported total annual CEO compensation of CN¥1.1m for the year to December 2023. We note that's a decrease of 10% compared to last year. We note that the salary portion, which stands at CN¥975.0k constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the Hong Kong Food industry with market capitalizations between HK$781m and HK$3.1b, we discovered that the median CEO total compensation of that group was CN¥1.8m. In other words, Natural Food International Holding pays its CEO lower than the industry median. Moreover, Zejun Zhang also holds HK$549m worth of Natural Food International Holding stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥975k	CN¥1.0m	93%
Other	CN¥76k	CN¥163k	7%
Total Compensation	CN¥1.1m	CN¥1.2m	100%

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. Natural Food International Holding is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Natural Food International Holding Limited's Growth Numbers

Over the past three years, Natural Food International Holding Limited has seen its earnings per share (EPS) grow by 47% per year. It achieved revenue growth of 7.3% 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Natural Food International Holding Limited Been A Good Investment?

Natural Food International Holding Limited has served shareholders reasonably well, with a total return of 11% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Natural Food International Holding that investors should be aware of in a dynamic business environment.

Important note: Natural Food International Holding 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.