It Looks Like China Feihe Limited's (HKG:6186) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• China Feihe will host its Annual General Meeting on 29th of May
• Salary of CN¥13.7m is part of CEO Youbin Leng's total remuneration
• Total compensation is 93% above industry average
• China Feihe's three-year loss to shareholders was 3.5% while its EPS was down 20% over the past three years

We've discovered 1 warning sign about China Feihe. View them for free.

The results at China Feihe Limited (HKG:6186) have been quite disappointing recently and CEO Youbin Leng bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for China Feihe

How Does Total Compensation For Youbin Leng Compare With Other Companies In The Industry?

At the time of writing, our data shows that China Feihe Limited has a market capitalization of HK$54b, and reported total annual CEO compensation of CN¥14m for the year to December 2024. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at CN¥13.7m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Food industry with market capitalizations ranging between HK$31b and HK$94b had a median total CEO compensation of CN¥7.2m. This suggests that Youbin Leng is paid more than the median for the industry. Moreover, Youbin Leng also holds HK$23b worth of China Feihe stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	CN¥14m	CN¥14m	99%
Other	CN¥161k	CN¥153k	1%
Total Compensation	CN¥14m	CN¥14m	100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. China Feihe is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Feihe Limited's Growth

Over the last three years, China Feihe Limited has shrunk its earnings per share by 20% per year. It achieved revenue growth of 6.2% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Feihe Limited Been A Good Investment?

Since shareholders would have lost about 3.5% over three years, some China Feihe 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...

Youbin receives almost all of their compensation through a salary. 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 compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for China Feihe that you should be aware of before investing.

Important note: China Feihe 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.