Here's Why Shareholders Should Examine China MeiDong Auto Holdings Limited's (HKG:1268) CEO Compensation Package More Closely

Key Insights

• China MeiDong Auto Holdings' Annual General Meeting to take place on 20th of May
• CEO Tao Ye's total compensation includes salary of CN¥2.42m
• The total compensation is 70% higher than the average for the industry
• China MeiDong Auto Holdings' EPS declined by 121% over the past three years while total shareholder loss over the past three years was 91%

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Shareholders will probably not be too impressed with the underwhelming results at China MeiDong Auto Holdings Limited (HKG:1268) recently. At the upcoming AGM on 20th of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for China MeiDong Auto Holdings

How Does Total Compensation For Tao Ye Compare With Other Companies In The Industry?

According to our data, China MeiDong Auto Holdings Limited has a market capitalization of HK$2.9b, and paid its CEO total annual compensation worth CN¥5.4m over the year to December 2024. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥2.4m.

On examining similar-sized companies in the Hong Kong Specialty Retail industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was CN¥3.2m. This suggests that Tao Ye is paid more than the median for the industry. Furthermore, Tao Ye directly owns HK$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	CN¥2.4m	CN¥2.4m	45%
Other	CN¥3.0m	CN¥3.0m	55%
Total Compensation	CN¥5.4m	CN¥5.4m	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. It's interesting to note that China MeiDong Auto Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

China MeiDong Auto Holdings Limited's Growth

Over the last three years, China MeiDong Auto Holdings Limited has shrunk its earnings per share by 121% per year. It saw its revenue drop 22% 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has China MeiDong Auto Holdings Limited Been A Good Investment?

With a total shareholder return of -91% over three years, China MeiDong Auto Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

So you may want to check if insiders are buying China MeiDong Auto Holdings shares with their own money (free access).

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.