Here's Why China Health Group Limited's (HKG:673) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• China Health Group's Annual General Meeting to take place on 12th of September
• Salary of HK$1.20m is part of CEO Ho Chung's total remuneration
• Total compensation is similar to the industry average
• China Health Group's total shareholder return over the past three years was 8.5% while its EPS was down 45% over the past three years

The share price of China Health Group Limited (HKG:673) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 12th of September. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for China Health Group

Comparing China Health Group Limited's CEO Compensation With The Industry

Our data indicates that China Health Group Limited has a market capitalization of HK$369m, and total annual CEO compensation was reported as HK$1.2m for the year to March 2024. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at HK$1.20m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Healthcare industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.6m. This suggests that China Health Group remunerates its CEO largely in line with the industry average.

Component	2024	2023	Proportion (2024)
Salary	HK$1.2m	HK$1.2m	99%
Other	HK$18k	HK$26k	1%
Total Compensation	HK$1.2m	HK$1.2m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. China Health Group has gone down a largely traditional route, paying Ho Chung a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

China Health Group Limited's Growth

Over the last three years, China Health Group Limited has shrunk its earnings per share by 45% per year. In the last year, its revenue is down 22%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 China Health Group Limited Been A Good Investment?

With a total shareholder return of 8.5% over three years, China Health Group Limited has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Ho receives almost all of their compensation through a salary. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 3 warning signs for China Health Group you should be aware of, and 1 of them is potentially serious.

Important note: China Health Group 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.