Shareholders May Find It Hard To Justify Increasing HC Group Inc.'s (HKG:2280) CEO Compensation For Now

Key Insights

• HC Group will host its Annual General Meeting on 30th of May
• Salary of CN¥1.20m is part of CEO Jun Liu's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, HC Group's EPS grew by 2.7% and over the past three years, the total loss to shareholders 67%

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Shareholders of HC Group Inc. (HKG:2280) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 30th of May. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for HC Group

Comparing HC Group Inc.'s CEO Compensation With The Industry

According to our data, HC Group Inc. has a market capitalization of HK$210m, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2024. That's a notable increase of 30% on last year. In particular, the salary of CN¥1.20m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.9m. This suggests that HC Group remunerates its CEO largely in line with the industry average. What's more, Jun Liu holds HK$8.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	CN¥1.2m	CN¥904k	90%
Other	CN¥131k	CN¥124k	10%
Total Compensation	CN¥1.3m	CN¥1.0m	100%

Speaking on an industry level, nearly 92% of total compensation represents salary, while the remainder of 8% is other remuneration. Our data reveals that HC Group allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

HC Group Inc.'s Growth

HC Group Inc.'s earnings per share (EPS) grew 2.7% per year over the last three years. In the last year, its revenue is down 41%.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has HC Group Inc. Been A Good Investment?

The return of -67% over three years would not have pleased HC Group Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for HC Group (1 doesn't sit too well with us!) that you should be aware of before investing here.

Important note: HC Group 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.