Nissin Foods Company Limited's (HKG:1475) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Nissin Foods' Annual General Meeting to take place on 5th of June
• Salary of HK$6.58m is part of CEO Kiyotaka Ando's total remuneration
• Total compensation is 91% above industry average
• Nissin Foods' three-year loss to shareholders was 12% while its EPS grew by 5.5% over the past three years

As many shareholders of Nissin Foods Company Limited (HKG:1475) will be aware, they have not made a gain on their investment in the past three years. 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 5th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Nissin Foods

How Does Total Compensation For Kiyotaka Ando Compare With Other Companies In The Industry?

Our data indicates that Nissin Foods Company Limited has a market capitalization of HK$5.2b, and total annual CEO compensation was reported as HK$7.8m for the year to December 2023. That's a fairly small increase of 3.9% over the previous year. We note that the salary portion, which stands at HK$6.58m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Food industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was HK$4.1m. Accordingly, our analysis reveals that Nissin Foods Company Limited pays Kiyotaka Ando north of the industry median. What's more, Kiyotaka Ando holds HK$100m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$6.6m	HK$6.7m	84%
Other	HK$1.3m	HK$897k	16%
Total Compensation	HK$7.8m	HK$7.6m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Nissin Foods pays out 84% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Nissin Foods Company Limited's Growth

Over the past three years, Nissin Foods Company Limited has seen its earnings per share (EPS) grow by 5.5% per year. In the last year, its revenue is down 5.7%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. 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 Nissin Foods Company Limited Been A Good Investment?

With a three year total loss of 12% for the shareholders, Nissin Foods Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Nissin Foods that investors should think about before committing capital to this stock.

Important note: Nissin Foods 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. 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.