Modern Chinese Medicine Group Co., Ltd.'s (HKG:1643) CEO Will Probably Struggle To See A Pay Rise This Year

Key Insights

• Modern Chinese Medicine Group will host its Annual General Meeting on 30th of May
• Total pay for CEO Hongli Zhang includes CN¥445.0k salary
• Total compensation is 75% below industry average
• Modern Chinese Medicine Group's EPS declined by 51% over the past three years while total shareholder loss over the past three years was 31%

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The disappointing performance at Modern Chinese Medicine Group Co., Ltd. (HKG:1643) will make some shareholders rather disheartened. The next AGM coming up on 30th of May will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for Modern Chinese Medicine Group

Comparing Modern Chinese Medicine Group Co., Ltd.'s CEO Compensation With The Industry

Our data indicates that Modern Chinese Medicine Group Co., Ltd. has a market capitalization of HK$207m, and total annual CEO compensation was reported as CN¥554k for the year to December 2024. That's a notable increase of 92% on last year. Notably, the salary which is CN¥445.0k, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Pharmaceuticals industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥2.2m. This suggests that Hongli Zhang is paid below the industry median.

Component	2024	2023	Proportion (2024)
Salary	CN¥445k	CN¥288k	80%
Other	CN¥109k	-	20%
Total Compensation	CN¥554k	CN¥288k	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Modern Chinese Medicine Group is paying a higher share of its remuneration through a salary in comparison to the overall 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 Modern Chinese Medicine Group Co., Ltd.'s Growth Numbers

Over the last three years, Modern Chinese Medicine Group Co., Ltd. has shrunk its earnings per share by 51% per year. Its revenue is down 38% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. 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 Modern Chinese Medicine Group Co., Ltd. Been A Good Investment?

Few Modern Chinese Medicine Group Co., Ltd. shareholders would feel satisfied with the return of -31% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Modern Chinese Medicine Group (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Modern Chinese Medicine 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.