Shareholders Will Most Likely Find Wuling Motors Holdings Limited's (HKG:305) CEO Compensation Acceptable

Despite strong share price growth of 397% for Wuling Motors Holdings Limited (HKG:305) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 10 June 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Wuling Motors Holdings

Comparing Wuling Motors Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Wuling Motors Holdings Limited has a market capitalization of HK$6.5b, and reported total annual CEO compensation of CN¥1.7m for the year to December 2020. That's slightly lower by 3.2% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥305k.

On comparing similar companies from the same industry with market caps ranging from HK$3.1b to HK$12b, we found that the median CEO total compensation was CN¥1.7m. From this we gather that Shing Lee is paid around the median for CEOs in the industry. Moreover, Shing Lee also holds HK$717m worth of Wuling Motors Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CN¥305k	CN¥375k	18%
Other	CN¥1.4m	CN¥1.4m	82%
Total Compensation	CN¥1.7m	CN¥1.8m	100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. It's interesting to note that Wuling Motors Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Wuling Motors Holdings Limited's Growth Numbers

Over the last three years, Wuling Motors Holdings Limited has shrunk its earnings per share by 108% per year. Its revenue is up 8.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Wuling Motors Holdings Limited Been A Good Investment?

Boasting a total shareholder return of 397% over three years, Wuling Motors Holdings Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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. We identified 3 warning signs for Wuling Motors Holdings (2 are potentially serious!) that you should be aware of before investing here.

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

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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. 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.
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