Shareholders May Be Wary Of Increasing Zhuguang Holdings Group Company Limited's (HKG:1176) CEO Compensation Package

Key Insights

• Zhuguang Holdings Group will host its Annual General Meeting on 14th of June
• CEO Jie Liu's total compensation includes salary of HK$5.13m
• The total compensation is 57% higher than the average for the industry
• Over the past three years, Zhuguang Holdings Group's EPS fell by 110% and over the past three years, the total loss to shareholders 91%

The results at Zhuguang Holdings Group Company Limited (HKG:1176) have been quite disappointing recently and CEO Jie Liu bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Zhuguang Holdings Group

How Does Total Compensation For Jie Liu Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zhuguang Holdings Group Company Limited has a market capitalization of HK$1.2b, and reported total annual CEO compensation of HK$5.2m for the year to December 2023. We note that's a small decrease of 6.3% on last year. In particular, the salary of HK$5.13m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Real Estate industry with market caps ranging from HK$781m to HK$3.1b, we found that the median CEO total compensation was HK$3.3m. Accordingly, our analysis reveals that Zhuguang Holdings Group Company Limited pays Jie Liu north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$5.1m	HK$5.5m	99%
Other	HK$61k	HK$70k	1%
Total Compensation	HK$5.2m	HK$5.5m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Zhuguang Holdings Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

Zhuguang Holdings Group Company Limited's Growth

Over the last three years, Zhuguang Holdings Group Company Limited has shrunk its earnings per share by 110% per year. It saw its revenue drop 28% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Zhuguang Holdings Group Company Limited Been A Good Investment?

The return of -91% over three years would not have pleased Zhuguang Holdings Group Company Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Jie receives almost all of their compensation through a salary. 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, 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 a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Zhuguang Holdings Group that investors should be aware of in a dynamic business environment.

Switching gears from Zhuguang Holdings Group, 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.