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How Should Investors Feel About China Parenting Network Holdings Limited's (HKG:1736) CEO Pay?

Simply Wall St

Li Cheng is the CEO of China Parenting Network Holdings Limited (HKG:1736). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for China Parenting Network Holdings

How Does Li Cheng's Compensation Compare With Similar Sized Companies?

Our data indicates that China Parenting Network Holdings Limited is worth HK$190m, and total annual CEO compensation was reported as CN¥699k for the year to December 2019. Notably, that's an increase of 15% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥628k. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO total compensation was CN¥1.6m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. Our data reveals that China Parenting Network Holdings allocates salary in line with the wider market.

Most shareholders would consider it a positive that Li Cheng takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see, below, how CEO compensation at China Parenting Network Holdings has changed over time.

SEHK:1736 CEO Compensation May 16th 2020

Is China Parenting Network Holdings Limited Growing?

On average over the last three years, China Parenting Network Holdings Limited has shrunk earnings per share by 38% each year (measured with a line of best fit). It saw its revenue drop 14% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has China Parenting Network Holdings Limited Been A Good Investment?

Given the total loss of 92% over three years, many shareholders in China Parenting Network Holdings Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

China Parenting Network Holdings Limited is currently paying its CEO below what is normal for companies of its size.

Li Cheng is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. This contrasts with the growth in CEO remuneration, albeit off a reasonably low base. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Taking a breather from CEO compensation, we've spotted 2 warning signs for China Parenting Network Holdings (of which 1 shouldn't be ignored!) you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.