This Is Why Zhejiang Chang'an Renheng Technology Co., Ltd.'s (HKG:8139) CEO Compensation Looks Appropriate

Key Insights

• Zhejiang Chang'an Renheng Technology's Annual General Meeting to take place on 20th of May
• Salary of CN¥362.7k is part of CEO Qinwei Xu's total remuneration
• The total compensation is 78% less than the average for the industry
• Zhejiang Chang'an Renheng Technology's EPS grew by 25% over the past three years while total shareholder loss over the past three years was 43%

Performance at Zhejiang Chang'an Renheng Technology Co., Ltd. (HKG:8139) has been rather uninspiring recently and shareholders may be wondering how CEO Qinwei Xu plans to fix this. At the next AGM coming up on 20th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Zhejiang Chang'an Renheng Technology

How Does Total Compensation For Qinwei Xu Compare With Other Companies In The Industry?

According to our data, Zhejiang Chang'an Renheng Technology Co., Ltd. has a market capitalization of HK$50m, and paid its CEO total annual compensation worth CN¥363k over the year to December 2023. That's a notable increase of 41% on last year. Notably, the salary of CN¥363k is the entirety of the CEO compensation.

On comparing similar-sized companies in the Hong Kong Chemicals industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.7m. That is to say, Qinwei Xu is paid under the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥363k	CN¥258k	100%
Other	-	-	-
Total Compensation	CN¥363k	CN¥258k	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Speaking on a company level, Zhejiang Chang'an Renheng Technology prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Zhejiang Chang'an Renheng Technology Co., Ltd.'s Growth Numbers

Zhejiang Chang'an Renheng Technology Co., Ltd. has seen its earnings per share (EPS) increase by 25% a year over the past three years. It achieved revenue growth of 7.6% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Zhejiang Chang'an Renheng Technology Co., Ltd. Been A Good Investment?

Few Zhejiang Chang'an Renheng Technology Co., Ltd. shareholders would feel satisfied with the return of -43% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Zhejiang Chang'an Renheng Technology pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Zhejiang Chang'an Renheng Technology (2 shouldn't be ignored!) that you should be aware of before investing here.

Important note: Zhejiang Chang'an Renheng Technology 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.