CAA Resources Limited's (HKG:2112) CEO Might Not Expect Shareholders To Be So Generous This Year

Simply Wall St
August 24, 2021
Source: Shutterstock

CAA Resources Limited (HKG:2112) has not performed well recently and CEO Yang Li will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31 August 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for CAA Resources

How Does Total Compensation For Yang Li Compare With Other Companies In The Industry?

According to our data, CAA Resources Limited has a market capitalization of HK$134m, and paid its CEO total annual compensation worth US$298k over the year to December 2020. That's a notable decrease of 20% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$111k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of US$315k. From this we gather that Yang Li is paid around the median for CEOs in the industry. What's more, Yang Li holds HK$75m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$111k US$106k 37%
Other US$187k US$267k 63%
Total CompensationUS$298k US$373k100%

On an industry level, roughly 85% of total compensation represents salary and 15% is other remuneration. In CAA Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

SEHK:2112 CEO Compensation August 24th 2021

CAA Resources Limited's Growth

CAA Resources Limited has reduced its earnings per share by 101% a year over the last three years. In the last year, its revenue is down 97%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CAA Resources Limited Been A Good Investment?

With a total shareholder return of -94% over three years, CAA Resources Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for CAA Resources you should be aware of, and 2 of them are significant.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.