Key Insights
- Zuoli Kechuang Micro-finance to hold its Annual General Meeting on 25th of June
- CEO Sheng Yang's total compensation includes salary of CN¥581.0k
- Total compensation is similar to the industry average
- Zuoli Kechuang Micro-finance's EPS declined by 0.6% over the past three years while total shareholder return over the past three years was 9.5%
Despite positive share price growth of 9.5% for Zuoli Kechuang Micro-finance Company Limited (HKG:6866) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 25th of June. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Check out our latest analysis for Zuoli Kechuang Micro-finance
Comparing Zuoli Kechuang Micro-finance Company Limited's CEO Compensation With The Industry
Our data indicates that Zuoli Kechuang Micro-finance Company Limited has a market capitalization of HK$389m, and total annual CEO compensation was reported as CN¥747k for the year to December 2023. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at CN¥581.0k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the Hong Kong Consumer Finance industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥747k. From this we gather that Sheng Yang is paid around the median for CEOs in the industry.
| Component | 2023 | 2022 | Proportion (2023) |
| Salary | CN¥581k | CN¥573k | 78% |
| Other | CN¥166k | CN¥158k | 22% |
| Total Compensation | CN¥747k | CN¥731k | 100% |
Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. There isn't a significant difference between Zuoli Kechuang Micro-finance and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Zuoli Kechuang Micro-finance Company Limited's Growth
Earnings per share at Zuoli Kechuang Micro-finance Company Limited are much the same as they were three years ago, albeit slightly lower. Its revenue is up 3.8% over the last year.
A lack of EPS improvement is not good to see. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Zuoli Kechuang Micro-finance Company Limited Been A Good Investment?
Zuoli Kechuang Micro-finance Company Limited has not done too badly by shareholders, with a total return of 9.5%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
To Conclude...
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Zuoli Kechuang Micro-finance (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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