There Could Be A Chance Charmacy Pharmaceutical Co., Ltd.'s (HKG:2289) CEO Will Have Their Compensation Increased

Key Insights

• Charmacy Pharmaceutical will host its Annual General Meeting on 20th of May
• CEO Chuanglong Yao's total compensation includes salary of CN¥636.3k
• Total compensation is 47% below industry average
• Charmacy Pharmaceutical's total shareholder return over the past three years was 188% while its EPS grew by 8.2% over the past three years

Shareholders will be pleased by the robust performance of Charmacy Pharmaceutical Co., Ltd. (HKG:2289) recently and this will be kept in mind in the upcoming AGM on 20th 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.

Check out our latest analysis for Charmacy Pharmaceutical

How Does Total Compensation For Chuanglong Yao Compare With Other Companies In The Industry?

Our data indicates that Charmacy Pharmaceutical Co., Ltd. has a market capitalization of HK$1.5b, and total annual CEO compensation was reported as CN¥728k for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥636.3k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Healthcare industry with market capitalizations ranging between HK$781m and HK$3.1b had a median total CEO compensation of CN¥1.4m. In other words, Charmacy Pharmaceutical pays its CEO lower than the industry median. What's more, Chuanglong Yao holds HK$479m 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¥636k	CN¥638k	87%
Other	CN¥92k	CN¥95k	13%
Total Compensation	CN¥728k	CN¥732k	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. Charmacy Pharmaceutical pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Charmacy Pharmaceutical Co., Ltd.'s Growth

Charmacy Pharmaceutical Co., Ltd.'s earnings per share (EPS) grew 8.2% per year over the last three years. In the last year, its revenue is up 5.5%.

We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. 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 Charmacy Pharmaceutical Co., Ltd. Been A Good Investment?

We think that the total shareholder return of 188%, over three years, would leave most Charmacy Pharmaceutical Co., Ltd. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

The company's overall performance, while not bad, could be better. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which can't be ignored) in Charmacy Pharmaceutical 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.