The underwhelming performance at Extrawell Pharmaceutical Holdings Limited (HKG:858) recently has probably not pleased shareholders. The next AGM coming up on 27 August 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.
Comparing Extrawell Pharmaceutical Holdings Limited's CEO Compensation With the industry
Our data indicates that Extrawell Pharmaceutical Holdings Limited has a market capitalization of HK$249m, and total annual CEO compensation was reported as HK$1.4m for the year to March 2021. This was the same amount the CEO received in the prior year. In particular, the salary of HK$1.32m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$4.1m. This suggests that Yi Xie is paid below the industry median.
Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. It's interesting to note that Extrawell Pharmaceutical Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Extrawell Pharmaceutical Holdings Limited's Growth
Extrawell Pharmaceutical Holdings Limited has reduced its earnings per share by 15% a year over the last three years. In the last year, its revenue is up 1.6%.
Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Extrawell Pharmaceutical Holdings Limited Been A Good Investment?
With a three year total loss of 25% for the shareholders, Extrawell Pharmaceutical Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Extrawell Pharmaceutical Holdings (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
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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