Hanhua Financial Holding Co., Ltd.'s (HKG:3903) CEO Will Probably Struggle To See A Pay Rise This Year

By
Simply Wall St
Published
June 21, 2021
SEHK:3903

The disappointing performance at Hanhua Financial Holding Co., Ltd. (HKG:3903) will make some shareholders rather disheartened. At the upcoming AGM on 29 June 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for Hanhua Financial Holding

How Does Total Compensation For Weilan Cui Compare With Other Companies In The Industry?

According to our data, Hanhua Financial Holding Co., Ltd. has a market capitalization of HK$2.7b, and paid its CEO total annual compensation worth CN¥3.1m over the year to December 2020. Notably, that's a decrease of 8.6% over the year before. Notably, the salary which is CN¥2.26m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was CN¥4.6m. In other words, Hanhua Financial Holding pays its CEO lower than the industry median. Moreover, Weilan Cui also holds HK$1.6m worth of Hanhua Financial Holding stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary CN¥2.3m CN¥2.3m 73%
Other CN¥850k CN¥1.1m 27%
Total CompensationCN¥3.1m CN¥3.4m100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. There isn't a significant difference between Hanhua Financial Holding and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
SEHK:3903 CEO Compensation June 22nd 2021

Hanhua Financial Holding Co., Ltd.'s Growth

Over the last three years, Hanhua Financial Holding Co., Ltd. has shrunk its earnings per share by 17% per year. Its revenue is down 17% over the previous year.

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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Hanhua Financial Holding Co., Ltd. Been A Good Investment?

With a three year total loss of 3.3% for the shareholders, Hanhua Financial Holding Co., Ltd. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Hanhua Financial Holding you should be aware of, and 1 of them is a bit unpleasant.

Important note: Hanhua Financial Holding 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. 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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