We Think The Compensation For MicroTech Medical (Hangzhou) Co., Ltd.'s (HKG:2235) CEO Looks About Right

Key Insights

• MicroTech Medical (Hangzhou) will host its Annual General Meeting on 28th of May
• Salary of CN¥1.22m is part of CEO Pan Zheng's total remuneration
• The total compensation is 71% less than the average for the industry
• Over the past three years, MicroTech Medical (Hangzhou)'s EPS fell by 40% and over the past three years, the total loss to shareholders 39%

We check all companies for important risks. See what we found for MicroTech Medical (Hangzhou) in our free report.

Performance at MicroTech Medical (Hangzhou) Co., Ltd. (HKG:2235) has been rather uninspiring recently and shareholders may be wondering how CEO Pan Zheng 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 28th 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. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for MicroTech Medical (Hangzhou)

How Does Total Compensation For Pan Zheng Compare With Other Companies In The Industry?

At the time of writing, our data shows that MicroTech Medical (Hangzhou) Co., Ltd. has a market capitalization of HK$2.6b, and reported total annual CEO compensation of CN¥1.3m for the year to December 2024. That's a notable increase of 19% on last year. Notably, the salary which is CN¥1.22m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Medical Equipment industry with market capitalizations ranging between HK$1.6b and HK$6.3b had a median total CEO compensation of CN¥4.4m. This suggests that Pan Zheng is paid below the industry median. Moreover, Pan Zheng also holds HK$591m worth of MicroTech Medical (Hangzhou) 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¥1.2m	CN¥1.0m	95%
Other	CN¥69k	CN¥68k	5%
Total Compensation	CN¥1.3m	CN¥1.1m	100%

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. It's interesting to note that MicroTech Medical (Hangzhou) pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at MicroTech Medical (Hangzhou) Co., Ltd.'s Growth Numbers

Over the last three years, MicroTech Medical (Hangzhou) Co., Ltd. has shrunk its earnings per share by 40% per year. In the last year, its revenue is up 36%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 MicroTech Medical (Hangzhou) Co., Ltd. Been A Good Investment?

Few MicroTech Medical (Hangzhou) Co., Ltd. shareholders would feel satisfied with the return of -39% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

So you may want to check if insiders are buying MicroTech Medical (Hangzhou) shares with their own money (free access).

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.