Key Insights

• China Beststudy Education Group to hold its Annual General Meeting on 16th of May
• Salary of CN¥1.55m is part of CEO Junjing Tang's total remuneration
• The total compensation is similar to the average for the industry
• China Beststudy Education Group's EPS declined by 9.0% over the past three years while total shareholder return over the past three years was 52%

China Beststudy Education Group (HKG:3978) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 16th of May may be an opportunity for shareholders to bring up any concerns they may have for the board's attention. 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.

How Does Total Compensation For Junjing Tang Compare With Other Companies In The Industry?

At the time of writing, our data shows that China Beststudy Education Group has a market capitalization of HK$2.5b, and reported total annual CEO compensation of CN¥1.6m for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥1.55m, makes up a huge portion of the total compensation being paid to the CEO.

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. So it looks like China Beststudy Education Group compensates Junjing Tang in line with the median for the industry. What's more, Junjing Tang holds HK$587m 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. Investors will find it interesting that China Beststudy Education Group pays the bulk of its rewards through a traditional salary, instead of 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 China Beststudy Education Group's Growth Numbers

China Beststudy Education Group has reduced its earnings per share by 9.0% a year over the last three years. In the last year, its revenue changed by just 0.4%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Beststudy Education Group Been A Good Investment?

Most shareholders would probably be pleased with China Beststudy Education Group for providing a total return of 52% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Junjing receives almost all of their compensation through a salary. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for China Beststudy Education Group you should be aware of, and 1 of them is concerning.

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.