Shareholders May Find It Hard To Justify Increasing Guangdong Kanghua Healthcare Co., Ltd.'s (HKG:3689) CEO Compensation For Now

Key Insights

• Guangdong Kanghua Healthcare's Annual General Meeting to take place on 26th of June
• Total pay for CEO Wangzhi Chen includes CN¥1.26m salary
• The overall pay is comparable to the industry average
• Guangdong Kanghua Healthcare's three-year loss to shareholders was 29% while its EPS grew by 30% over the past three years

Shareholders of Guangdong Kanghua Healthcare Co., Ltd. (HKG:3689) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 26th of June. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Guangdong Kanghua Healthcare

How Does Total Compensation For Wangzhi Chen Compare With Other Companies In The Industry?

Our data indicates that Guangdong Kanghua Healthcare Co., Ltd. has a market capitalization of HK$752m, and total annual CEO compensation was reported as CN¥1.5m for the year to December 2023. We note that's a decrease of 29% compared to last year. We note that the salary portion, which stands at CN¥1.26m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Healthcare industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.5m. From this we gather that Wangzhi Chen is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.3m	CN¥1.2m	86%
Other	CN¥210k	CN¥857k	14%
Total Compensation	CN¥1.5m	CN¥2.1m	100%

Talking in terms of the industry, salary represented approximately 72% of total compensation out of all the companies we analyzed, while other remuneration made up 28% of the pie. Guangdong Kanghua Healthcare pays out 86% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Guangdong Kanghua Healthcare Co., Ltd.'s Growth

Over the past three years, Guangdong Kanghua Healthcare Co., Ltd. has seen its earnings per share (EPS) grow by 30% per year. In the last year, its revenue is up 11%.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Guangdong Kanghua Healthcare Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in Guangdong Kanghua Healthcare Co., Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Guangdong Kanghua Healthcare that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.

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