Most Shareholders Will Probably Find That The Compensation For Huakang Biomedical Holdings Company Limited's (HKG:8622) CEO Is Reasonable

Key Insights

• Huakang Biomedical Holdings to hold its Annual General Meeting on 18th of June
• CEO Chunguang Zhang's total compensation includes salary of CN¥314.0k
• Total compensation is 55% below industry average
• Over the past three years, Huakang Biomedical Holdings' EPS grew by 39% and over the past three years, the total loss to shareholders 17%

The performance at Huakang Biomedical Holdings Company Limited (HKG:8622) has been rather lacklustre of late and shareholders may be wondering what CEO Chunguang Zhang is planning to do about this. At the next AGM coming up on 18th of June, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Huakang Biomedical Holdings

Comparing Huakang Biomedical Holdings Company Limited's CEO Compensation With The Industry

According to our data, Huakang Biomedical Holdings Company Limited has a market capitalization of HK$45m, and paid its CEO total annual compensation worth CN¥703k over the year to December 2023. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥314k.

In comparison with other companies in the Hong Kong Medical Equipment industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.5m. Accordingly, Huakang Biomedical Holdings pays its CEO under the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥314k	CN¥308k	45%
Other	CN¥389k	CN¥381k	55%
Total Compensation	CN¥703k	CN¥689k	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. In Huakang Biomedical Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Huakang Biomedical Holdings Company Limited's Growth

Huakang Biomedical Holdings Company Limited has seen its earnings per share (EPS) increase by 39% a year over the past three years. Its revenue is down 2.8% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Huakang Biomedical Holdings Company Limited Been A Good Investment?

Since shareholders would have lost about 17% over three years, some Huakang Biomedical Holdings Company Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

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. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which don't sit too well with us) in Huakang Biomedical Holdings we think you should know about.

Switching gears from Huakang Biomedical Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.