Key Insights
- Hengan International Group will host its Annual General Meeting on 20th of May
- Salary of CN¥9.88m is part of CEO Ching Lau Hui's total remuneration
- The total compensation is 336% higher than the average for the industry
- Over the past three years, Hengan International Group's EPS fell by 11% and over the past three years, the total loss to shareholders 29%
Shareholders will probably not be too impressed with the underwhelming results at Hengan International Group Company Limited (HKG:1044) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 20th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Hengan International Group
How Does Total Compensation For Ching Lau Hui Compare With Other Companies In The Industry?
According to our data, Hengan International Group Company Limited has a market capitalization of HK$26b, and paid its CEO total annual compensation worth CN¥14m over the year to December 2024. We note that's a small decrease of 7.2% on last year. In particular, the salary of CN¥9.88m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar companies from the Hong Kong Personal Products industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was CN¥3.3m. Hence, we can conclude that Ching Lau Hui is remunerated higher than the industry median. Furthermore, Ching Lau Hui directly owns HK$49m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | CN¥9.9m | CN¥7.0m | 69% |
| Other | CN¥4.4m | CN¥8.4m | 31% |
| Total Compensation | CN¥14m | CN¥15m | 100% |
Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. In Hengan International Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Hengan International Group Company Limited's Growth Numbers
Over the last three years, Hengan International Group Company Limited has shrunk its earnings per share by 11% per year. Its revenue is down 4.6% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Hengan International Group Company Limited Been A Good Investment?
Given the total shareholder loss of 29% over three years, many shareholders in Hengan International Group Company Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Hengan International Group that investors should be aware of in a dynamic business environment.
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.
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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.