Shareholders Will Probably Hold Off On Increasing Haitong International Securities Group Limited's (HKG:665) CEO Compensation For The Time Being

The underwhelming share price performance of Haitong International Securities Group Limited (HKG:665) in the past three years would have disappointed many shareholders. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 28 May 2021 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Haitong International Securities Group

How Does Total Compensation For Yong Lin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Haitong International Securities Group Limited has a market capitalization of HK$14b, and reported total annual CEO compensation of HK$21m for the year to December 2020. That's slightly lower by 5.1% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$4.3m.

On comparing similar companies from the same industry with market caps ranging from HK$7.8b to HK$25b, we found that the median CEO total compensation was HK$21m. This suggests that Haitong International Securities Group remunerates its CEO largely in line with the industry average. What's more, Yong Lin holds HK$19m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	HK$4.3m	HK$4.3m	21%
Other	HK$16m	HK$18m	79%
Total Compensation	HK$21m	HK$22m	100%

Speaking on an industry level, nearly 85% of total compensation represents salary, while the remainder of 15% is other remuneration. It's interesting to note that Haitong International Securities Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Haitong International Securities Group Limited's Growth Numbers

Haitong International Securities Group Limited has reduced its earnings per share by 3.6% a year over the last three years. Its revenue is up 64% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Haitong International Securities Group Limited Been A Good Investment?

With a total shareholder return of -41% over three years, Haitong International Securities Group Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In 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 is in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Haitong International Securities Group you should be aware of, and 1 of them can't be ignored.

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. 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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