Shareholders May Be More Conservative With South Manganese Investment Limited's (HKG:1091) CEO Compensation For Now

Key Insights

• South Manganese Investment's Annual General Meeting to take place on 21st of June
• Total pay for CEO Weijian Li includes HK$7.18m salary
• Total compensation is 1,830% above industry average
• South Manganese Investment's three-year loss to shareholders was 18% while its EPS grew by 49% over the past three years

In the past three years, the share price of South Manganese Investment Limited (HKG:1091) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 21st 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.

See our latest analysis for South Manganese Investment

How Does Total Compensation For Weijian Li Compare With Other Companies In The Industry?

Our data indicates that South Manganese Investment Limited has a market capitalization of HK$1.4b, and total annual CEO compensation was reported as HK$19m for the year to December 2023. That's a notable increase of 25% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$7.2m.

For comparison, other companies in the Hong Kong Metals and Mining industry with market capitalizations ranging between HK$781m and HK$3.1b had a median total CEO compensation of HK$970k. Hence, we can conclude that Weijian Li is remunerated higher than the industry median.

Component	2023	2021	Proportion (2023)
Salary	HK$7.2m	HK$5.1m	38%
Other	HK$12m	HK$10.0m	62%
Total Compensation	HK$19m	HK$15m	100%

Talking in terms of the industry, salary represented approximately 86% of total compensation out of all the companies we analyzed, while other remuneration made up 14% of the pie. It's interesting to note that South Manganese Investment allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at South Manganese Investment Limited's Growth Numbers

Over the past three years, South Manganese Investment Limited has seen its earnings per share (EPS) grow by 49% per year. Its revenue is up 6.9% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has South Manganese Investment Limited Been A Good Investment?

Given the total shareholder loss of 18% over three years, many shareholders in South Manganese Investment Limited are probably rather dissatisfied, to say the least. 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. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At 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 will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for South Manganese Investment (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: South Manganese Investment 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com