Here's Why Kontafarma China Holdings Limited's (HKG:1312) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• Kontafarma China Holdings' Annual General Meeting to take place on 7th of June
• CEO Chaowen Jiang's total compensation includes salary of HK$1.63m
• The total compensation is 38% less than the average for the industry
• Kontafarma China Holdings' three-year loss to shareholders was 53% while its EPS grew by 46% over the past three years

Performance at Kontafarma China Holdings Limited (HKG:1312) has been rather uninspiring recently and shareholders may be wondering how CEO Chaowen Jiang plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 7th of June. 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. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Kontafarma China Holdings

How Does Total Compensation For Chaowen Jiang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kontafarma China Holdings Limited has a market capitalization of HK$184m, and reported total annual CEO compensation of HK$3.4m for the year to December 2023. That's a notable increase of 20% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$1.6m.

On comparing similar-sized companies in the Hong Kong Pharmaceuticals industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$5.4m. This suggests that Chaowen Jiang is paid below the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$1.6m	HK$1.7m	49%
Other	HK$1.7m	HK$1.1m	51%
Total Compensation	HK$3.4m	HK$2.8m	100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. It's interesting to note that Kontafarma China Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Kontafarma China Holdings Limited's Growth Numbers

Kontafarma China Holdings Limited has seen its earnings per share (EPS) increase by 46% a year over the past three years. It saw its revenue drop 9.5% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Kontafarma China Holdings Limited Been A Good Investment?

The return of -53% over three years would not have pleased Kontafarma China Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Kontafarma China Holdings we think you should know about.

Switching gears from Kontafarma China 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.