Here's What We Learned About The CEO Pay At China Parenting Network Holdings Limited (HKG:1736)

Li Cheng is the CEO of China Parenting Network Holdings Limited (HKG:1736), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for China Parenting Network Holdings

How Does Total Compensation For Li Cheng Compare With Other Companies In The Industry?

At the time of writing, our data shows that China Parenting Network Holdings Limited has a market capitalization of HK$250m, and reported total annual CEO compensation of CN¥699k for the year to December 2019. That's a notable increase of 15% on last year. In particular, the salary of CN¥628.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥891k. From this we gather that Li Cheng is paid around the median for CEOs in the industry. What's more, Li Cheng holds HK$29m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Our data reveals that China Parenting Network Holdings allocates salary more or less in line with the wider market. 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 reduced its earnings per share by 74% a year over the last three years. Its revenue is down 34% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?

Since shareholders would have lost about 62% over three years, some China Parenting Network Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, China Parenting Network Holdings pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for China Parenting Network Holdings (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from China Parenting Network 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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