Key Insights

• Newlink Technology to hold its Annual General Meeting on 26th of June
• CEO Shuchun Zhai's total compensation includes salary of CN¥1.33m
• The total compensation is 40% less than the average for the industry
• Over the past three years, Newlink Technology's EPS fell by 104% and over the past three years, the total shareholder return was 26%

Shareholders may be wondering what CEO Shuchun Zhai plans to do to improve the less than great performance at Newlink Technology Inc. (HKG:9600) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 26th 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 think CEO compensation looks appropriate given the data we have put together.

How Does Total Compensation For Shuchun Zhai Compare With Other Companies In The Industry?

According to our data, Newlink Technology Inc. has a market capitalization of HK$2.4b, and paid its CEO total annual compensation worth CN¥1.4m over the year to December 2023. We note that's an increase of 39% above last year. We note that the salary portion, which stands at CN¥1.33m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong IT industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was CN¥2.4m. Accordingly, Newlink Technology pays its CEO under the industry median. Furthermore, Shuchun Zhai directly owns HK$758m 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 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Our data reveals that Newlink Technology allocates salary more or less in line with the wider market. 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 Newlink Technology Inc.'s Growth Numbers

Newlink Technology Inc. has reduced its earnings per share by 104% a year over the last three years. Its revenue is down 5.8% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Newlink Technology Inc. Been A Good Investment?

Newlink Technology Inc. has served shareholders reasonably well, with a total return of 26% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which are concerning) in Newlink Technology we think you should know about.

Switching gears from Newlink Technology, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com