Handong Cheng

About Handong Cheng

Handong Cheng, age 54, is Chairman, Chief Executive Officer, President, and Acting Chief Financial Officer of ZW Data Action Technologies Inc. (CNET). He has served as CEO since September 2007 and was appointed Acting CFO and Secretary on May 4, 2023; he holds an EMBA from Peking University’s Guanghua School of Management and a degree in economic law from Wuhan University . During 2023–2024, pay-versus-performance disclosures show cumulative TSR value of $21 and $37 for a hypothetical $100 investment and GAAP net losses of $3.8M and $6.0M, indicating challenging shareholder returns and profitability over the period .

Past Roles

External Roles

Fixed Compensation

Notes:

• Company states executives receive base salary and equity incentives generally, but no equity awards were granted to NEOs in 2023–2024 .
• No material perquisites or deferred compensation are provided; executives are reimbursed for out-of-pocket expenses subject only to Board review .

Performance Compensation

• No pre-established, objective performance goals or metrics were used by the Board in determining executive compensation for the covered years .
• No RSUs or options were granted to the PEO/NEOs in 2023–2024; no outstanding equity incentive awards as of December 31, 2024 .
• “Compensation actually paid” equals SCT totals due to absence of equity award adjustments in 2023–2024 .

Equity Ownership & Alignment

• Breakdown: 147,099 shares via Rise King Investments Limited (owned collectively by Cheng, Xuanfu Liu, and Zhige Zhang; beneficial ownership disclaimed) and 129,675 shares directly by Cheng .
• Shares outstanding context: 3,268,429 common shares outstanding at record date noted in proxy; numbers restated for 1-for-4 reverse split effective September 30, 2024 .
• Pledging/Hedging: Proxy and 10-K do not disclose pledging of CNET common shares by Cheng; Insider Trading Policy exists with blackout periods, but no explicit hedging/pledging policies are cited in these documents . VIE-related “equity interest pledge” agreements exist for PRC entities (structural control), not pledges of CNET common stock .

Employment Terms

Board Governance

• Board service history: Director since 2007; currently Chairman; CEO and Chairman roles are combined; Board believes combined role enhances decisiveness and accountability .
• Lead Independent Director: None; independent directors coordinate executive sessions collaboratively given board size .
• Committee memberships: Audit, Compensation, and Nominating & Corporate Governance Committees comprised solely of independent directors; Audit held 5 meetings, Compensation 1, Nominating 2 in 2024 .
• Committee members: Audit—Chang Qiu (Chair, financial expert), Zhiqing Chen, Chung Wang Yiu (Ron); Compensation—Zhiqing Chen, Chang Qiu, Chung Wang Yiu (Ron); Nominating—Zhiqing Chen, Chang Qiu, Chung Wang Yiu (Ron) .
• Attendance: Board held 9 meetings in 2024; all directors attended ≥75% of meetings; all directors attended the 2024 annual meeting .
• Independence: Cheng is not independent; five directors are independent under Nasdaq/Exchange Act criteria .

Director Compensation

• Not applicable to Cheng (executive officer). 2024 director compensation for non-NEOs included cash fees and equity grants for certain independent directors (e.g., Chang Qiu: $6,000 cash, $33,000 stock) .

Performance & Track Record

• Executive pay philosophy: Board has not adopted formal performance goals; CEO may not be present for Compensation Committee deliberations about his pay; no compensation consultants used .

Compensation Committee Analysis

• Composition: Zhiqing Chen, Chang Qiu, Chung Wang Yiu (Ron); solely independent directors .
• Process: Reviews corporate goals annually; CEO excluded from deliberations on his compensation; no consultant engaged; held one meeting in 2024 .
• Policy: Board has not established formal objective performance metrics; advisory say-on-pay vote slated for stockholders (non-binding) .

Risk Indicators & Red Flags

• Dual roles: CEO + Chairman + Acting CFO with no Lead Independent Director—heightened governance concentration and potential oversight risk .
• No equity awards/metrics: Absence of performance-tied equity awards and formal performance metrics reduces pay-for-performance alignment signaling .
• Financial performance: Revenues halved YoY and continued GAAP losses in 2024; TSR values indicate weak shareholder returns over the disclosed period .
• Section 16 compliance: Company reported timely filings in 2024 with one late Form 4 by another director; no late filings attributed to Cheng .

Investment Implications

• Alignment: Cheng’s beneficial ownership of 276,774 shares (including indirect Rise King exposure) provides meaningful “skin in the game,” but lack of recent equity awards and formal performance metrics weakens explicit pay-for-performance incentives .
• Governance: Combined CEO/Chair/Acting CFO role and absence of a Lead Independent Director elevate key-person and governance risk; independent committee structure mitigates some risk, but oversight concentration remains .
• Retention and selling pressure: Base salary is modest and there are no outstanding equity awards, reducing near-term vesting-related selling pressure; no disclosure of pledged CNET shares by Cheng, though historic VIE equity-interest pledges pertain to PRC entities, not CNET stock .
• Event protection: No severance or change-in-control protections suggests limited legacy entitlements; potential retention risk in a sale or transition scenario, but stronger shareholder-favorable economics in change-of-control outcomes due to absence of golden parachutes .
• Performance backdrop: Weak TSR and persistent net losses highlight execution risk; focus should be on operational turnaround and governance enhancements to improve investor confidence ahead of equity plan utilization (2024 Plan 400k shares available; 2025 Plan proposed at 500k shares) .