Shareholders May Not Be So Generous With CStone Pharmaceuticals' (HKG:2616) CEO Compensation And Here's Why

Key Insights

• CStone Pharmaceuticals' Annual General Meeting to take place on 25th of June
• CEO Jason Yang's total compensation includes salary of CN¥5.05m
• Total compensation is 336% above industry average
• CStone Pharmaceuticals' three-year loss to shareholders was 18% while its EPS grew by 81% over the past three years

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Shareholders of CStone Pharmaceuticals (HKG:2616) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of June could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for CStone Pharmaceuticals

Comparing CStone Pharmaceuticals' CEO Compensation With The Industry

Our data indicates that CStone Pharmaceuticals has a market capitalization of HK$5.8b, and total annual CEO compensation was reported as CN¥29m for the year to December 2024. Notably, that's a decrease of 51% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥5.1m.

In comparison with other companies in the Hong Kong Biotechs industry with market capitalizations ranging from HK$3.1b to HK$13b, the reported median CEO total compensation was CN¥6.5m. Hence, we can conclude that Jason Yang is remunerated higher than the industry median. What's more, Jason Yang holds HK$76m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. CStone Pharmaceuticals pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at CStone Pharmaceuticals' Growth Numbers

CStone Pharmaceuticals has seen its earnings per share (EPS) increase by 81% a year over the past three years. Its revenue is down 12% over the previous 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has CStone Pharmaceuticals Been A Good Investment?

With a three year total loss of 18% for the shareholders, CStone Pharmaceuticals would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for CStone Pharmaceuticals that you should be aware of before investing.

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.