We Think GF Securities Co., Ltd.'s (SZSE:000776) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• GF Securities' Annual General Meeting to take place on 10th of May
• CEO Chuanhui Lin's total compensation includes salary of CN¥2.32m
• The total compensation is similar to the average for the industry
• GF Securities' three-year loss to shareholders was 3.0% while its EPS was down 18% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at GF Securities Co., Ltd. (SZSE:000776) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 10th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for GF Securities

How Does Total Compensation For Chuanhui Lin Compare With Other Companies In The Industry?

At the time of writing, our data shows that GF Securities Co., Ltd. has a market capitalization of CN¥90b, and reported total annual CEO compensation of CN¥3.8m for the year to December 2023. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at CN¥2.32m constitutes the majority of total compensation received by the CEO.

On comparing similar companies in the Chinese Capital Markets industry with market capitalizations above CN¥58b, we found that the median total CEO compensation was CN¥3.2m. This suggests that GF Securities remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	CN¥2.3m	CN¥2.3m	60%
Other	CN¥1.5m	CN¥1.5m	40%
Total Compensation	CN¥3.8m	CN¥3.9m	100%

Speaking on an industry level, nearly 46% of total compensation represents salary, while the remainder of 54% is other remuneration. GF Securities is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at GF Securities Co., Ltd.'s Growth Numbers

GF Securities Co., Ltd. has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is down 13%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has GF Securities Co., Ltd. Been A Good Investment?

With a three year total loss of 3.0% for the shareholders, GF Securities Co., Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for GF Securities that investors should look into moving forward.

Important note: GF Securities 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.