China Parenting Network Holdings Limited's (HKG:1736) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• China Parenting Network Holdings will host its Annual General Meeting on 18th of June
• Salary of CN¥493.0k is part of CEO Li Cheng's total remuneration
• Total compensation is 81% below industry average
• China Parenting Network Holdings' EPS grew by 30% over the past three years while total shareholder loss over the past three years was 91%

The performance at China Parenting Network Holdings Limited (HKG:1736) has been rather lacklustre of late and shareholders may be wondering what CEO Li Cheng 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. 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.

Check out our latest analysis for China Parenting Network Holdings

Comparing China Parenting Network Holdings Limited's CEO Compensation With The Industry

Our data indicates that China Parenting Network Holdings Limited has a market capitalization of HK$24m, and total annual CEO compensation was reported as CN¥560k for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥493.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Interactive Media and Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥3.0m. Accordingly, China Parenting Network Holdings pays its CEO under the industry median. What's more, Li Cheng holds HK$1.7m 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¥493k	CN¥485k	88%
Other	CN¥67k	CN¥79k	12%
Total Compensation	CN¥560k	CN¥564k	100%

On an industry level, around 33% of total compensation represents salary and 67% is other remuneration. It's interesting to note that China Parenting Network Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

China Parenting Network Holdings Limited's Growth

China Parenting Network Holdings Limited has seen its earnings per share (EPS) increase by 30% a year over the past three years. Its revenue is down 32% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Parenting Network Holdings Limited Been A Good Investment?

The return of -91% over three years would not have pleased China Parenting Network Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for China Parenting Network Holdings you should be aware of, and 3 of them shouldn't be ignored.

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.