Increases to Capital Finance Holdings Limited's (HKG:8239) CEO Compensation Might Cool off for now

Key Insights

• Capital Finance Holdings' Annual General Meeting to take place on 18th of June
• Salary of HK$516.0k is part of CEO Wei Zhang's total remuneration
• The total compensation is 55% higher than the average for the industry
• Capital Finance Holdings' EPS grew by 121% over the past three years while total shareholder loss over the past three years was 81%

The underwhelming share price performance of Capital Finance Holdings Limited (HKG:8239) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18th of June. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Capital Finance Holdings

Comparing Capital Finance Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Capital Finance Holdings Limited has a market capitalization of HK$55m, and reported total annual CEO compensation of HK$1.2m for the year to December 2023. That's a notable decrease of 53% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$516k.

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. Hence, we can conclude that Wei Zhang is remunerated higher than the industry median. Furthermore, Wei Zhang directly owns HK$3.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$516k	HK$542k	41%
Other	HK$733k	HK$2.1m	59%
Total Compensation	HK$1.2m	HK$2.7m	100%

Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. In Capital Finance Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Capital Finance Holdings Limited's Growth Numbers

Over the past three years, Capital Finance Holdings Limited has seen its earnings per share (EPS) grow by 121% per year. Its revenue is down 22% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Capital Finance Holdings Limited Been A Good Investment?

The return of -81% over three years would not have pleased Capital Finance Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Capital Finance Holdings (1 makes us a bit uncomfortable!) 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.