Here's Why Shareholders Should Examine Kaisa Health Group Holdings Limited's (HKG:876) CEO Compensation Package More Closely

Key Insights

• Kaisa Health Group Holdings to hold its Annual General Meeting on 14th of June
• Salary of HK$1.23m is part of CEO Jun Luo's total remuneration
• Total compensation is similar to the industry average
• Kaisa Health Group Holdings' EPS declined by 8.9% over the past three years while total shareholder loss over the past three years was 86%

The results at Kaisa Health Group Holdings Limited (HKG:876) have been quite disappointing recently and CEO Jun Luo bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Kaisa Health Group Holdings

Comparing Kaisa Health Group Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Kaisa Health Group Holdings Limited has a market capitalization of HK$116m, and reported total annual CEO compensation of HK$2.1m for the year to December 2023. Notably, that's a decrease of 34% over the year before. We note that the salary of HK$1.23m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Medical Equipment industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.7m. From this we gather that Jun Luo is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.2m	HK$1.8m	60%
Other	HK$835k	HK$1.3m	40%
Total Compensation	HK$2.1m	HK$3.1m	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Our data reveals that Kaisa Health Group Holdings allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Kaisa Health Group Holdings Limited's Growth Numbers

Over the last three years, Kaisa Health Group Holdings Limited has shrunk its earnings per share by 8.9% per year. Its revenue is down 2.9% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Kaisa Health Group Holdings Limited Been A Good Investment?

The return of -86% over three years would not have pleased Kaisa Health Group Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 1 which is significant) in Kaisa Health Group Holdings 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.

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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.