Here's Why Shareholders Should Examine Newlink Technology Inc.'s (HKG:9600) CEO Compensation Package More Closely

Key Insights

• Newlink Technology's Annual General Meeting to take place on 9th of June
• Salary of CN¥1.46m is part of CEO Shuchun Zhai's total remuneration
• The overall pay is comparable to the industry average
• Newlink Technology's three-year loss to shareholders was 90% while its EPS was down 102% over the past three years

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Newlink Technology Inc. (HKG:9600) has not performed well recently and CEO Shuchun Zhai will probably need to up their game. At the upcoming AGM on 9th of June, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Newlink Technology

Comparing Newlink Technology Inc.'s CEO Compensation With The Industry

According to our data, Newlink Technology Inc. has a market capitalization of HK$239m, and paid its CEO total annual compensation worth CN¥1.6m over the year to December 2024. Notably, that's an increase of 9.6% over the year before. Notably, the salary which is CN¥1.46m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong IT industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.6m. From this we gather that Shuchun Zhai is paid around the median for CEOs in the industry. What's more, Shuchun Zhai holds HK$78m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. Newlink Technology is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Newlink Technology Inc.'s Growth

Over the last three years, Newlink Technology Inc. has shrunk its earnings per share by 102% per year. Its revenue is up 14% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Newlink Technology Inc. Been A Good Investment?

Few Newlink Technology Inc. shareholders would feel satisfied with the return of -90% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business 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 2 warning signs (and 1 which is a bit concerning) in Newlink Technology we think you should know about.

Important note: Newlink Technology is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.