Shareholders May Not Be So Generous With Youzan Technology Limited's (HKG:8083) CEO Compensation And Here's Why

Key Insights

• Youzan Technology will host its Annual General Meeting on 27th of May
• CEO Ning Zhu's total compensation includes salary of CN¥2.28m
• The overall pay is comparable to the industry average
• Youzan Technology's EPS grew by 121% over the past three years while total shareholder loss over the past three years was 14%

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As many shareholders of Youzan Technology Limited (HKG:8083) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 27th of May. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Youzan Technology

Comparing Youzan Technology Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Youzan Technology Limited has a market capitalization of HK$3.0b, and reported total annual CEO compensation of CN¥3.6m for the year to December 2024. Notably, that's a decrease of 13% over the year before. In particular, the salary of CN¥2.28m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Hong Kong Software industry with market capitalizations between HK$1.6b and HK$6.3b, we discovered that the median CEO total compensation of that group was CN¥3.6m. From this we gather that Ning Zhu is paid around the median for CEOs in the industry. Moreover, Ning Zhu also holds HK$537m worth of Youzan Technology stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. There isn't a significant difference between Youzan Technology and the broader market, in terms of salary allocation in the overall compensation package. 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 Youzan Technology Limited's Growth Numbers

Youzan Technology Limited has seen its earnings per share (EPS) increase by 121% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Youzan Technology Limited Been A Good Investment?

With a three year total loss of 14% for the shareholders, Youzan Technology Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

So you may want to check if insiders are buying Youzan Technology shares with their own money (free access).

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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.