Most Shareholders Will Probably Find That The Compensation For Zhong An Group Limited's (HKG:672) CEO Is Reasonable

Key Insights

• Zhong An Group will host its Annual General Meeting on 6th of June
• CEO Jiangang Zhang's total compensation includes salary of CN¥1.07m
• The total compensation is 33% less than the average for the industry
• Zhong An Group's three-year loss to shareholders was 65% while its EPS was down 17% over the past three years

Performance at Zhong An Group Limited (HKG:672) has been rather uninspiring recently and shareholders may be wondering how CEO Jiangang Zhang plans to fix this. At the next AGM coming up on 6th of June, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Zhong An Group

Comparing Zhong An Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Zhong An Group Limited has a market capitalization of HK$716m, and reported total annual CEO compensation of CN¥1.1m for the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of CN¥1.07m, makes up a huge portion of the total compensation being paid to 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. In other words, Zhong An Group pays its CEO lower than the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.1m	CN¥1.1m	94%
Other	CN¥68k	CN¥84k	6%
Total Compensation	CN¥1.1m	CN¥1.1m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Zhong An Group pays out 94% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Zhong An Group Limited's Growth Numbers

Over the last three years, Zhong An Group Limited has shrunk its earnings per share by 17% per year. Its revenue is up 57% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Zhong An Group Limited Been A Good Investment?

The return of -65% over three years would not have pleased Zhong An Group Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which doesn't sit too well with us) in Zhong An Group we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.