Key Insights

• Scholar Education Group will host its Annual General Meeting on 14th of May
• Salary of CN¥345.0k is part of CEO Mingzhi Qi's total remuneration
• Total compensation is 68% below industry average
• Scholar Education Group's EPS grew by 21% over the past three years while total shareholder loss over the past three years was 21%

The performance at Scholar Education Group (HKG:1769) has been rather lacklustre of late and shareholders may be wondering what CEO Mingzhi Qi is planning to do about this. At the next AGM coming up on 14th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

How Does Total Compensation For Mingzhi Qi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Scholar Education Group has a market capitalization of HK$2.6b, and reported total annual CEO compensation of CN¥525k for the year to December 2023. That's a notable decrease of 31% on last year. Notably, the salary which is CN¥345.0k, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Consumer Services industry with market capitalizations ranging from HK$1.6b to HK$6.3b, the reported median CEO total compensation was CN¥1.7m. Accordingly, Scholar Education Group pays its CEO under the industry median. What's more, Mingzhi Qi holds HK$59m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 85% of total compensation represents salary and 15% is other remuneration. Scholar Education Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Scholar Education Group's Growth

Scholar Education Group's earnings per share (EPS) grew 21% per year over the last three years. In the last year, its revenue is up 42%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Scholar Education Group Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Scholar Education Group investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board's judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is significant) in Scholar Education Group we think you should know about.

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.