We Think Some Shareholders May Hesitate To Increase JL Mag Rare-Earth Co., Ltd.'s (SZSE:300748) CEO Compensation

Key Insights

• JL Mag Rare-Earth's Annual General Meeting to take place on 5th of June
• Total pay for CEO Baogui Cai includes CN¥911.0k salary
• The overall pay is comparable to the industry average
• Over the past three years, JL Mag Rare-Earth's EPS grew by 9.0% and over the past three years, the total loss to shareholders 14%

In the past three years, the share price of JL Mag Rare-Earth Co., Ltd. (SZSE:300748) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 5th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for JL Mag Rare-Earth

Comparing JL Mag Rare-Earth Co., Ltd.'s CEO Compensation With The Industry

Our data indicates that JL Mag Rare-Earth Co., Ltd. has a market capitalization of CN¥18b, and total annual CEO compensation was reported as CN¥1.8m for the year to December 2023. We note that's a decrease of 44% compared to last year. Notably, the salary which is CN¥911.0k, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the Chinese Electrical industry with market caps ranging from CN¥14b to CN¥46b, we found that the median CEO total compensation was CN¥1.6m. This suggests that JL Mag Rare-Earth remunerates its CEO largely in line with the industry average. Moreover, Baogui Cai also holds CN¥15m worth of JL Mag Rare-Earth stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥911k	CN¥1.9m	52%
Other	CN¥847k	CN¥1.3m	48%
Total Compensation	CN¥1.8m	CN¥3.1m	100%

Talking in terms of the industry, salary represented approximately 75% of total compensation out of all the companies we analyzed, while other remuneration made up 25% of the pie. JL Mag Rare-Earth pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at JL Mag Rare-Earth Co., Ltd.'s Growth Numbers

Over the past three years, JL Mag Rare-Earth Co., Ltd. has seen its earnings per share (EPS) grow by 9.0% per year. In the last year, its revenue is down 10%.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has JL Mag Rare-Earth Co., Ltd. Been A Good Investment?

Since shareholders would have lost about 14% over three years, some JL Mag Rare-Earth Co., Ltd. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for JL Mag Rare-Earth (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from JL Mag Rare-Earth, 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.