Key Insights

• Jiahua Stores Holdings to hold its Annual General Meeting on 11th of June
• CEO Xiao Xiong Zhuang's total compensation includes salary of CN¥203.0k
• The overall pay is 44% below the industry average
• Jiahua Stores Holdings' EPS grew by 14% over the past three years while total shareholder loss over the past three years was 78%

Shareholders may be wondering what CEO Xiao Xiong Zhuang plans to do to improve the less than great performance at Jiahua Stores Holdings Limited (HKG:602) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 11th of June. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Comparing Jiahua Stores Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Jiahua Stores Holdings Limited has a market capitalization of HK$36m, and reported total annual CEO compensation of CN¥999k for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥203k.

For comparison, other companies in the Hong Kong Multiline Retail industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.8m. This suggests that Xiao Xiong Zhuang is paid below the industry median. What's more, Xiao Xiong Zhuang holds HK$2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. It's interesting to note that Jiahua Stores Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Jiahua Stores Holdings Limited's Growth Numbers

Jiahua Stores Holdings Limited's earnings per share (EPS) grew 14% per year over the last three years. Its revenue is up 5.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Jiahua Stores Holdings Limited Been A Good Investment?

With a total shareholder return of -78% over three years, Jiahua Stores Holdings Limited shareholders would by and large be disappointed. 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. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Jiahua Stores Holdings that investors should look into moving forward.

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.