Key Insights

• China Health Group to hold its Annual General Meeting on 12th of September
• Salary of HK$1.20m is part of CEO Ho Chung's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, China Health Group's EPS fell by 45% and over the past three years, the total shareholder return was 8.5%

Despite China Health Group Limited's (HKG:673) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 12th of September 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. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

How Does Total Compensation For Ho Chung Compare With Other Companies In The Industry?

According to our data, China Health Group Limited has a market capitalization of HK$369m, and paid its CEO total annual compensation worth HK$1.2m over the year to March 2024. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$1.20m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Healthcare industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.6m. From this we gather that Ho Chung is paid around the median for CEOs in the industry.

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. China Health Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Health Group Limited's Growth

China Health Group Limited has reduced its earnings per share by 45% a year over the last three years. In the last year, its revenue is down 22%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has China Health Group Limited Been A Good Investment?

China Health Group Limited has generated a total shareholder return of 8.5% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

China Health Group pays its CEO a majority of compensation through a salary. While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for China Health Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: China Health Group 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.