Key Insights

• China Outfitters Holdings to hold its Annual General Meeting on 17th of May
• Salary of CN¥2.49m is part of CEO Yongli Zhang's total remuneration
• The overall pay is 101% above the industry average
• China Outfitters Holdings' EPS declined by 19% over the past three years while total shareholder loss over the past three years was 47%

The results at China Outfitters Holdings Limited (HKG:1146) have been quite disappointing recently and CEO Yongli Zhang bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 17th of May. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

How Does Total Compensation For Yongli Zhang Compare With Other Companies In The Industry?

According to our data, China Outfitters Holdings Limited has a market capitalization of HK$334m, and paid its CEO total annual compensation worth CN¥3.6m over the year to December 2023. We note that's an increase of 9.4% above last year. In particular, the salary of CN¥2.49m, makes up a huge portion of the total compensation being paid to the CEO.

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. This suggests that Yongli Zhang is paid more than the median for the industry. Furthermore, Yongli Zhang directly owns HK$876k worth of shares in the company.

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. In China Outfitters Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.

A Look at China Outfitters Holdings Limited's Growth Numbers

Over the last three years, China Outfitters Holdings Limited has shrunk its earnings per share by 19% per year. In the last year, its revenue changed by just 0.6%.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Outfitters Holdings Limited Been A Good Investment?

Few China Outfitters Holdings Limited shareholders would feel satisfied with the return of -47% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for China Outfitters Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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.