Key Insights
- Cheerwin Group's Annual General Meeting to take place on 19th of June
- Salary of CN¥6.88m is part of CEO Danxia Chen's total remuneration
- The overall pay is 662% above the industry average
- Cheerwin Group's EPS declined by 16% over the past three years while total shareholder loss over the past three years was 77%
Cheerwin Group Limited (HKG:6601) has not performed well recently and CEO Danxia Chen will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 19th of June. 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. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for Cheerwin Group
How Does Total Compensation For Danxia Chen Compare With Other Companies In The Industry?
According to our data, Cheerwin Group Limited has a market capitalization of HK$2.3b, and paid its CEO total annual compensation worth CN¥11m over the year to December 2023. That's a fairly small increase of 6.7% over the previous year. We note that the salary portion, which stands at CN¥6.88m constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the Hong Kong Household Products 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¥1.4m. Hence, we can conclude that Danxia Chen is remunerated higher than the industry median. Furthermore, Danxia Chen directly owns HK$7.6m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2023 | 2022 | Proportion (2023) |
| Salary | CN¥6.9m | CN¥6.9m | 64% |
| Other | CN¥3.9m | CN¥3.3m | 36% |
| Total Compensation | CN¥11m | CN¥10m | 100% |
On an industry level, roughly 94% of total compensation represents salary and 6% is other remuneration. Cheerwin Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Cheerwin Group Limited's Growth Numbers
Over the last three years, Cheerwin Group Limited has shrunk its earnings per share by 16% per year. In the last year, its revenue is up 12%.
The decline in EPS is a bit concerning. 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. 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 Cheerwin Group Limited Been A Good Investment?
The return of -77% over three years would not have pleased Cheerwin Group Limited shareholders. This suggests it would be unwise for the company to pay the CEO too 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
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 Cheerwin Group that investors should look into moving forward.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.