Key Insights

• Chen Lin Education Group Holdings will host its Annual General Meeting on 19th of February
• CEO Yulin Huang's total compensation includes salary of CN¥2.85m
• The overall pay is 90% above the industry average
• Over the past three years, Chen Lin Education Group Holdings' EPS fell by 25% and over the past three years, the total loss to shareholders 47%

The results at Chen Lin Education Group Holdings Limited (HKG:1593) have been quite disappointing recently and CEO Yulin Huang bears some responsibility for this. At the upcoming AGM on 19th of February, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

How Does Total Compensation For Yulin Huang Compare With Other Companies In The Industry?

Our data indicates that Chen Lin Education Group Holdings Limited has a market capitalization of HK$1.7b, and total annual CEO compensation was reported as CN¥5.0m for the year to August 2023. Notably, that's an increase of 16% over the year before. Notably, the salary which is CN¥2.85m, represents a considerable chunk of the total compensation being paid.

On examining similar-sized companies in the Hong Kong Consumer Services industry with market capitalizations between HK$782m and HK$3.1b, we discovered that the median CEO total compensation of that group was CN¥2.6m. Accordingly, our analysis reveals that Chen Lin Education Group Holdings Limited pays Yulin Huang north of the industry median. Furthermore, Yulin Huang directly owns HK$942m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. Chen Lin Education Group Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Chen Lin Education Group Holdings Limited's Growth Numbers

Chen Lin Education Group Holdings Limited has reduced its earnings per share by 25% a year over the last three years. Its revenue is up 9.4% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Chen Lin Education Group Holdings Limited Been A Good Investment?

The return of -47% over three years would not have pleased Chen Lin Education Group Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Chen Lin Education Group Holdings that investors should be aware of in a dynamic business environment.

Important note: Chen Lin Education Group 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.