We Think Zhongsheng Group Holdings Limited's (HKG:881) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Zhongsheng Group Holdings to hold its Annual General Meeting on 21st of June
• CEO Guoqiang Li's total compensation includes salary of CN¥2.34m
• The total compensation is 1,637% higher than the average for the industry
• Zhongsheng Group Holdings' three-year loss to shareholders was 78% while its EPS was down 4.8% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Zhongsheng Group Holdings Limited (HKG:881) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 21st 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Zhongsheng Group Holdings

How Does Total Compensation For Guoqiang Li Compare With Other Companies In The Industry?

Our data indicates that Zhongsheng Group Holdings Limited has a market capitalization of HK$31b, and total annual CEO compensation was reported as CN¥35m for the year to December 2023. That's a notable decrease of 23% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥2.3m.

On examining similar-sized companies in the Hong Kong Specialty Retail industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was CN¥2.0m. This suggests that Guoqiang Li is paid more than the median for the industry. Moreover, Guoqiang Li also holds HK$6.3b worth of Zhongsheng Group Holdings 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¥2.3m	CN¥2.2m	7%
Other	CN¥32m	CN¥43m	93%
Total Compensation	CN¥35m	CN¥45m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Zhongsheng Group Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Zhongsheng Group Holdings Limited's Growth Numbers

Over the last three years, Zhongsheng Group Holdings Limited has shrunk its earnings per share by 4.8% per year. Revenue was pretty flat on last year.

Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Zhongsheng Group Holdings Limited Been A Good Investment?

Few Zhongsheng Group Holdings Limited shareholders would feel satisfied with the return of -78% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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.

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 Zhongsheng Group Holdings that investors should look into moving forward.

Switching gears from Zhongsheng Group Holdings, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com