Why We Think ZK International Group Co., Ltd.'s (NASDAQ:ZKIN) CEO Compensation Is Not Excessive At All

Performance at ZK International Group Co., Ltd. (NASDAQ:ZKIN) has been rather uninspiring recently and shareholders may be wondering how CEO Jiancong Huang plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 28 September 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for ZK International Group

How Does Total Compensation For Jiancong Huang Compare With Other Companies In The Industry?

According to our data, ZK International Group Co., Ltd. has a market capitalization of US$79m, and paid its CEO total annual compensation worth US$71k over the year to September 2020. This means that the compensation hasn't changed much from last year. It is worth noting that the CEO compensation consists entirely of the salary, worth US$71k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$183k. This suggests that Jiancong Huang is paid below the industry median. What's more, Jiancong Huang holds US$14m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$71k	US$73k	100%
Other	-	-	-
Total Compensation	US$71k	US$73k	100%

Talking in terms of the industry, salary represented approximately 30% of total compensation out of all the companies we analyzed, while other remuneration made up 70% of the pie. On a company level, ZK International Group prefers to reward its CEO through a salary, opting not to pay Jiancong Huang through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at ZK International Group Co., Ltd.'s Growth Numbers

ZK International Group Co., Ltd. has reduced its earnings per share by 68% a year over the last three years. Its revenue is up 23% over the last year.

The reduction in EPS, over three years, is arguably concerning. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has ZK International Group Co., Ltd. Been A Good Investment?

Since shareholders would have lost about 0.7% over three years, some ZK International Group Co., Ltd. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

ZK International Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Shareholders will be disappointed with the share price performance as they go into the AGM. This may have to do with the lack of earnings growth at the company, which may explain the lacklustre returns. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for ZK International Group you should be aware of, and 2 of them are a bit concerning.

Switching gears from ZK International Group, 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.
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