Shareholders May Be More Conservative With Nissin Foods Company Limited's (HKG:1475) CEO Compensation For Now

Key Insights

• Nissin Foods will host its Annual General Meeting on 5th of June
• CEO Kiyotaka Ando's total compensation includes salary of HK$6.40m
• The overall pay is 184% above the industry average
• Nissin Foods' total shareholder return over the past three years was 48% while its EPS was down 14% over the past three years

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Despite strong share price growth of 48% for Nissin Foods Company Limited (HKG:1475) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 5th of June. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Nissin Foods

Comparing Nissin Foods Company Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Nissin Foods Company Limited has a market capitalization of HK$7.2b, and reported total annual CEO compensation of HK$7.2m for the year to December 2024. That's slightly lower by 7.9% over the previous year. In particular, the salary of HK$6.40m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Food industry with market caps ranging from HK$3.1b to HK$13b, we found that the median CEO total compensation was HK$2.5m. Accordingly, our analysis reveals that Nissin Foods Company Limited pays Kiyotaka Ando north of the industry median. What's more, Kiyotaka Ando holds HK$146m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Although there is a difference in how total compensation is set, Nissin Foods more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Nissin Foods Company Limited's Growth Numbers

Nissin Foods Company Limited has reduced its earnings per share by 14% a year over the last three years. It achieved revenue growth of 4.3% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Nissin Foods Company Limited Been A Good Investment?

Boasting a total shareholder return of 48% over three years, Nissin Foods Company Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs 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.