Key Insights

• China Weaving Materials Holdings to hold its Annual General Meeting on 6th of June
• Total pay for CEO Yongxiang Zheng includes CN¥1.09m salary
• Total compensation is 40% below industry average
• China Weaving Materials Holdings' three-year loss to shareholders was 37% while its EPS was down 71% over the past three years

The underwhelming performance at China Weaving Materials Holdings Limited (HKG:3778) recently has probably not pleased shareholders. The next AGM coming up on 6th of June will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

Comparing China Weaving Materials Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that China Weaving Materials Holdings Limited has a market capitalization of HK$313m, and reported total annual CEO compensation of CN¥1.1m for the year to December 2023. That's a notable increase of 9.2% on last year. Notably, the salary which is CN¥1.09m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.8m. In other words, China Weaving Materials Holdings pays its CEO lower than the industry median. Furthermore, Yongxiang Zheng directly owns HK$46m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. China Weaving Materials Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

China Weaving Materials Holdings Limited's Growth

Over the last three years, China Weaving Materials Holdings Limited has shrunk its earnings per share by 71% per year. In the last year, its revenue is down 16%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has China Weaving Materials Holdings Limited Been A Good Investment?

The return of -37% over three years would not have pleased China Weaving Materials Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

China Weaving Materials Holdings pays its CEO a majority of compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are concerning) in China Weaving Materials Holdings we think you should know about.

Important note: China Weaving Materials Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.