We Think The Compensation For Wenzhou Kangning Hospital Co., Ltd.'s (HKG:2120) CEO Looks About Right

Key Insights

• Wenzhou Kangning Hospital to hold its Annual General Meeting on 30th of May
• CEO Lianyue Wang's total compensation includes salary of CN¥468.6k
• Total compensation is 55% below industry average
• Wenzhou Kangning Hospital's EPS grew by 15% over the past three years while total shareholder loss over the past three years was 58%

Performance at Wenzhou Kangning Hospital Co., Ltd. (HKG:2120) has been rather uninspiring recently and shareholders may be wondering how CEO Lianyue Wang plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 30th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Wenzhou Kangning Hospital

Comparing Wenzhou Kangning Hospital Co., Ltd.'s CEO Compensation With The Industry

Our data indicates that Wenzhou Kangning Hospital Co., Ltd. has a market capitalization of HK$858m, and total annual CEO compensation was reported as CN¥659k for the year to December 2023. That's a slight decrease of 3.5% on the prior year. We note that the salary portion, which stands at CN¥468.6k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Healthcare industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.5m. In other words, Wenzhou Kangning Hospital pays its CEO lower than the industry median. What's more, Lianyue Wang holds HK$43m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥469k	CN¥516k	71%
Other	CN¥190k	CN¥167k	29%
Total Compensation	CN¥659k	CN¥683k	100%

Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. Although there is a difference in how total compensation is set, Wenzhou Kangning Hospital more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Wenzhou Kangning Hospital Co., Ltd.'s Growth Numbers

Over the past three years, Wenzhou Kangning Hospital Co., Ltd. has seen its earnings per share (EPS) grow by 15% per year. In the last year, its revenue is up 7.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Wenzhou Kangning Hospital Co., Ltd. Been A Good Investment?

Few Wenzhou Kangning Hospital Co., Ltd. shareholders would feel satisfied with the return of -58% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Wenzhou Kangning Hospital you should be aware of, and 1 of them is a bit concerning.

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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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.