Here's Why Shareholders Should Examine Chinlink International Holdings Limited's (HKG:997) CEO Compensation Package More Closely

Shareholders will probably not be too impressed with the underwhelming results at Chinlink International Holdings Limited (HKG:997) recently. At the upcoming AGM on 28 September 2021, shareholders can hear from the board including their plans for turning around performance. 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 Chinlink International Holdings

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

Our data indicates that Chinlink International Holdings Limited has a market capitalization of HK$374m, and total annual CEO compensation was reported as HK$2.3m for the year to March 2021. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at HK$2.32m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.6m. So it looks like Chinlink International Holdings compensates Weibin Li in line with the median for the industry. Moreover, Weibin Li also holds HK$228m worth of Chinlink International Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$2.3m	HK$2.3m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$2.3m	HK$2.3m	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. Chinlink International Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Chinlink International Holdings Limited's Growth Numbers

Chinlink International Holdings Limited has reduced its earnings per share by 48% a year over the last three years. Its revenue is down 47% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Chinlink International Holdings Limited Been A Good Investment?

With a total shareholder return of -93% over three years, Chinlink International Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Weibin receives almost all of their compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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. We identified 5 warning signs for Chinlink International Holdings (3 are significant!) that you should be aware of before investing here.

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.

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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.
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