We Think Shareholders May Want To Consider A Review Of Greater China Financial Holdings Limited's (HKG:431) CEO Compensation Package

Key Insights

• Greater China Financial Holdings will host its Annual General Meeting on 18th of June
• CEO Dayong Yang's total compensation includes salary of HK$1.20m
• Total compensation is 51% above industry average
• Over the past three years, Greater China Financial Holdings' EPS fell by 15% and over the past three years, the total loss to shareholders 61%

Shareholders will probably not be too impressed with the underwhelming results at Greater China Financial Holdings Limited (HKG:431) recently. At the upcoming AGM on 18th of June, shareholders can hear from the board including their plans for turning around performance. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Greater China Financial Holdings

Comparing Greater China Financial Holdings Limited's CEO Compensation With The Industry

According to our data, Greater China Financial Holdings Limited has a market capitalization of HK$645m, and paid its CEO total annual compensation worth HK$1.2m over the year to December 2023. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at HK$1.20m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Consumer Finance industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$805k. Accordingly, our analysis reveals that Greater China Financial Holdings Limited pays Dayong Yang north of the industry median. Moreover, Dayong Yang also holds HK$51m worth of Greater China Financial Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	HK$1.2m	HK$1.2m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.2m	HK$1.2m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Greater China Financial Holdings has gone down a largely traditional route, paying Dayong Yang a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Greater China Financial Holdings Limited's Growth

Over the last three years, Greater China Financial Holdings Limited has shrunk its earnings per share by 15% per year. Its revenue is down 76% over the previous year.

Overall this is not a very positive result for shareholders. 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 Greater China Financial Holdings Limited Been A Good Investment?

The return of -61% over three years would not have pleased Greater China Financial Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Greater China Financial Holdings pays its CEO a majority of compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 Greater China Financial Holdings (2 are a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.