Here's Why It's Unlikely That China Risun Group Limited's (HKG:1907) CEO Will See A Pay Rise This Year

Key Insights

• China Risun Group will host its Annual General Meeting on 30th of May
• Salary of CN¥5.69m is part of CEO Xuegang Yang's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, China Risun Group's EPS fell by 22% and over the past three years, the total loss to shareholders 40%

Shareholders will probably not be too impressed with the underwhelming results at China Risun Group Limited (HKG:1907) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for China Risun Group

How Does Total Compensation For Xuegang Yang Compare With Other Companies In The Industry?

Our data indicates that China Risun Group Limited has a market capitalization of HK$13b, and total annual CEO compensation was reported as CN¥5.8m for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥5.69m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Hong Kong Chemicals industry with market capitalizations between HK$7.8b and HK$25b, we discovered that the median CEO total compensation of that group was CN¥5.8m. From this we gather that Xuegang Yang is paid around the median for CEOs in the industry. What's more, Xuegang Yang holds HK$9.5b 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¥5.7m	CN¥5.6m	99%
Other	CN¥63k	CN¥58k	1%
Total Compensation	CN¥5.8m	CN¥5.7m	100%

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. China Risun Group is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Risun Group Limited's Growth

Over the last three years, China Risun Group Limited has shrunk its earnings per share by 22% per year. It achieved revenue growth of 6.8% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Risun Group Limited Been A Good Investment?

With a total shareholder return of -40% over three years, China Risun Group Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

China Risun Group pays its CEO a majority of compensation through a salary. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in China Risun Group 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.