Shareholders May Be A Bit More Conservative With Yincheng Life Service CO., Ltd.'s (HKG:1922) CEO Compensation For Now

Key Insights

• Yincheng Life Service will host its Annual General Meeting on 18th of June
• Salary of CN¥824.0k is part of CEO Chunling Li's total remuneration
• Total compensation is similar to the industry average
• Yincheng Life Service's EPS grew by 20% over the past three years while total shareholder loss over the past three years was 62%

In the past three years, the share price of Yincheng Life Service CO., Ltd. (HKG:1922) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 18th of June. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Yincheng Life Service

Comparing Yincheng Life Service CO., Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Yincheng Life Service CO., Ltd. has a market capitalization of HK$470m, and reported total annual CEO compensation of CN¥1.4m for the year to December 2023. That's a notable increase of 11% on last year. We note that the salary of CN¥824.0k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.7m. This suggests that Yincheng Life Service remunerates its CEO largely in line with the industry average. Moreover, Chunling Li also holds HK$10m worth of Yincheng Life Service stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥824k	CN¥824k	57%
Other	CN¥612k	CN¥467k	43%
Total Compensation	CN¥1.4m	CN¥1.3m	100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. It's interesting to note that Yincheng Life Service allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Yincheng Life Service CO., Ltd.'s Growth Numbers

Yincheng Life Service CO., Ltd.'s earnings per share (EPS) grew 20% per year over the last three years. Its revenue is up 15% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Yincheng Life Service CO., Ltd. Been A Good Investment?

The return of -62% over three years would not have pleased Yincheng Life Service CO., Ltd. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Yincheng Life Service that investors should look into moving forward.

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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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.