Here's Why We Think Chaoda Modern Agriculture (Holdings) Limited's (HKG:682) CEO Compensation Looks Fair

The performance at Chaoda Modern Agriculture (Holdings) Limited (HKG:682) has been rather lacklustre of late and shareholders may be wondering what CEO Ho Kwok is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 17 December 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Chaoda Modern Agriculture (Holdings)

Comparing Chaoda Modern Agriculture (Holdings) Limited's CEO Compensation With the industry

According to our data, Chaoda Modern Agriculture (Holdings) Limited has a market capitalization of HK$129m, and paid its CEO total annual compensation worth CN¥382k over the year to June 2021. That's a notable decrease of 49% on last year. Notably, the salary which is CN¥376.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.3m. Accordingly, Chaoda Modern Agriculture (Holdings) pays its CEO under the industry median. Furthermore, Ho Kwok directly owns HK$25m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	CN¥376k	CN¥739k	98%
Other	CN¥6.0k	CN¥16k	2%
Total Compensation	CN¥382k	CN¥755k	100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Chaoda Modern Agriculture (Holdings) has gone down a largely traditional route, paying Ho Kwok a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Chaoda Modern Agriculture (Holdings) Limited's Growth Numbers

Chaoda Modern Agriculture (Holdings) Limited's earnings per share (EPS) grew 123% per year over the last three years. It achieved revenue growth of 1.8% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Chaoda Modern Agriculture (Holdings) Limited Been A Good Investment?

The return of -46% over three years would not have pleased Chaoda Modern Agriculture (Holdings) Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Chaoda Modern Agriculture (Holdings) pays its CEO a majority of compensation through a salary. The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Chaoda Modern Agriculture (Holdings) that investors should think about before committing capital to this stock.

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.