Most Shareholders Will Probably Agree With Zhongzhi Pharmaceutical Holdings Limited's (HKG:3737) CEO Compensation

Key Insights

• Zhongzhi Pharmaceutical Holdings to hold its Annual General Meeting on 17th of May
• Total pay for CEO Ying Feng Lai includes CN¥1.09m salary
• Total compensation is 72% below industry average
• Zhongzhi Pharmaceutical Holdings' EPS grew by 4.1% over the past three years while total shareholder loss over the past three years was 4.1%

The performance at Zhongzhi Pharmaceutical Holdings Limited (HKG:3737) has been rather lacklustre of late and shareholders may be wondering what CEO Ying Feng Lai is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 17th of May. 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 Zhongzhi Pharmaceutical Holdings

How Does Total Compensation For Ying Feng Lai Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zhongzhi Pharmaceutical Holdings Limited has a market capitalization of HK$1.0b, and reported total annual CEO compensation of CN¥1.4m for the year to December 2023. We note that's an increase of 28% above last year. We note that the salary portion, which stands at CN¥1.09m constitutes the majority of total compensation received by the CEO.

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 CN¥5.0m. In other words, Zhongzhi Pharmaceutical Holdings pays its CEO lower than the industry median. Furthermore, Ying Feng Lai directly owns HK$7.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.1m	CN¥802k	79%
Other	CN¥291k	CN¥279k	21%
Total Compensation	CN¥1.4m	CN¥1.1m	100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. It's interesting to note that Zhongzhi Pharmaceutical Holdings pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Zhongzhi Pharmaceutical Holdings Limited's Growth Numbers

Zhongzhi Pharmaceutical Holdings Limited has seen its earnings per share (EPS) increase by 4.1% a year over the past three years. Its revenue is up 12% over the last year.

This revenue growth could really point to a brighter future. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Zhongzhi Pharmaceutical Holdings Limited Been A Good Investment?

Since shareholders would have lost about 4.1% over three years, some Zhongzhi Pharmaceutical Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

It may not be surprising to some that the recent weak performance in the share price may be driven in part by rather flat EPS growth. 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. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Zhongzhi Pharmaceutical Holdings we think you should know about.

Switching gears from Zhongzhi Pharmaceutical 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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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.