Differ Group Auto Limited's (HKG:6878) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• Differ Group Auto's Annual General Meeting to take place on 29th of August
• Salary of CN¥864.0k is part of CEO Chi Chung Ng's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Differ Group Auto's EPS fell by 118% and over the past three years, the total loss to shareholders 100%

Shareholders of Differ Group Auto Limited (HKG:6878) will have been dismayed by the negative share price return over the last three years. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 29th of August 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 our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Differ Group Auto

Comparing Differ Group Auto Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Differ Group Auto Limited has a market capitalization of HK$53m, and reported total annual CEO compensation of CN¥880k for the year to December 2023. Notably, that's an increase of 19% over the year before. Notably, the salary which is CN¥864.0k, represents most of the total compensation being paid.

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 CN¥1.0m. From this we gather that Chi Chung Ng is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	CN¥864k	CN¥723k	98%
Other	CN¥16k	CN¥16k	2%
Total Compensation	CN¥880k	CN¥739k	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Investors will find it interesting that Differ Group Auto pays the bulk of its rewards through a traditional salary, instead of 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.

Differ Group Auto Limited's Growth

Over the last three years, Differ Group Auto Limited has shrunk its earnings per share by 118% per year. In the last year, its revenue is up 123%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Differ Group Auto Limited Been A Good Investment?

Few Differ Group Auto Limited shareholders would feel satisfied with the return of -100% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Chi Chung receives almost all of their compensation through a salary. The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. 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 compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Differ Group Auto you should be aware of, and 4 of them are significant.

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.