It's Unlikely That Shareholders Will Increase Jilin Province Huinan Changlong Bio-pharmacy Company Limited's (HKG:8049) Compensation By Much This Year

By
Simply Wall St
Published
June 05, 2021
SEHK:8049
Source: Shutterstock

Performance at Jilin Province Huinan Changlong Bio-pharmacy Company Limited (HKG:8049) has not been particularly rosy recently and shareholders will likely be holding CEO Hong Zhang and the board accountable for this. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 11 June 2021. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Jilin Province Huinan Changlong Bio-pharmacy

How Does Total Compensation For Hong Zhang Compare With Other Companies In The Industry?

According to our data, Jilin Province Huinan Changlong Bio-pharmacy Company Limited has a market capitalization of HK$706m, and paid its CEO total annual compensation worth CN¥515k over the year to December 2020. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥267.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥3.2m. That is to say, Hong Zhang is paid under the industry median. Furthermore, Hong Zhang directly owns HK$128m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary CN¥267k CN¥278k 52%
Other CN¥248k CN¥248k 48%
Total CompensationCN¥515k CN¥526k100%

Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. Jilin Province Huinan Changlong Bio-pharmacy sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

ceo-compensation
SEHK:8049 CEO Compensation June 6th 2021

A Look at Jilin Province Huinan Changlong Bio-pharmacy Company Limited's Growth Numbers

Over the last three years, Jilin Province Huinan Changlong Bio-pharmacy Company Limited has shrunk its earnings per share by 3.0% per year. In the last year, its revenue changed by just 1.0%.

A lack of EPS improvement is not good to see. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Jilin Province Huinan Changlong Bio-pharmacy Company Limited Been A Good Investment?

With a three year total loss of 5.6% for the shareholders, Jilin Province Huinan Changlong Bio-pharmacy Company Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Jilin Province Huinan Changlong Bio-pharmacy 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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