It's Unlikely That The CEO Of China Digital Video Holdings Limited (HKG:8280) Will See A Huge Pay Rise This Year

Key Insights

• China Digital Video Holdings' Annual General Meeting to take place on 28th of September
• Salary of CN¥95.0k is part of CEO Fu Shuang Zheng's total remuneration
• The total compensation is similar to the average for the industry
• China Digital Video Holdings' EPS grew by 7.7% over the past three years while total shareholder loss over the past three years was 20%

The underwhelming share price performance of China Digital Video Holdings Limited (HKG:8280) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of September. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for China Digital Video Holdings

Comparing China Digital Video Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that China Digital Video Holdings Limited has a market capitalization of HK$20m, and reported total annual CEO compensation of CN¥856k for the year to March 2023. We note that's an increase of 49% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥95k.

On comparing similar-sized companies in the Hong Kong Entertainment industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.1m. So it looks like China Digital Video Holdings compensates Fu Shuang Zheng in line with the median for the industry. What's more, Fu Shuang Zheng holds HK$7.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2021	Proportion (2023)
Salary	CN¥95k	CN¥95k	11%
Other	CN¥761k	CN¥481k	89%
Total Compensation	CN¥856k	CN¥576k	100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. It's interesting to note that China Digital Video Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

China Digital Video Holdings Limited's Growth

Over the past three years, China Digital Video Holdings Limited has seen its earnings per share (EPS) grow by 7.7% per year. Its revenue is down 14% over the previous year.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 China Digital Video Holdings Limited Been A Good Investment?

With a three year total loss of 20% for the shareholders, China Digital Video Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for China Digital Video Holdings that investors should look into moving forward.

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.