We Think The Compensation For CNNC International Limited's (HKG:2302) CEO Looks About Right

The performance at CNNC International Limited (HKG:2302) has been rather lacklustre of late and shareholders may be wondering what CEO Yi Zhang is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 16 December 2022. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

Our analysis indicates that 2302 is potentially overvalued!

How Does Total Compensation For Yi Zhang Compare With Other Companies In The Industry?

Our data indicates that CNNC International Limited has a market capitalization of HK$1.1b, and total annual CEO compensation was reported as HK$750k for the year to December 2021. That's a notable increase of 29% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$58k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. This suggests that Yi Zhang is paid below the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$58k	HK$17k	8%
Other	HK$692k	HK$563k	92%
Total Compensation	HK$750k	HK$580k	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. CNNC International sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

CNNC International Limited's Growth

CNNC International Limited has reduced its earnings per share by 3.0% a year over the last three years. In the last year, its revenue is up 43%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has CNNC International Limited Been A Good Investment?

Since shareholders would have lost about 24% over three years, some CNNC International Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss is certainly disheartening. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for CNNC International that you should be aware of before investing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.