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.
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.
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.
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.
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.
If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.