Shareholders Will Likely Find China Hongqiao Group Limited's (HKG:1378) CEO Compensation Acceptable

Key Insights

• China Hongqiao Group will host its Annual General Meeting on 14th of May
• Salary of CN¥187.0k is part of CEO Bo Zhang's total remuneration
• The overall pay is 69% below the industry average
• Over the past three years, China Hongqiao Group's EPS fell by 0.3% and over the past three years, the total shareholder return was 12%

The performance at China Hongqiao Group Limited (HKG:1378) has been rather lacklustre of late and shareholders may be wondering what CEO Bo Zhang is planning to do about this. At the next AGM coming up on 14th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for China Hongqiao Group

Comparing China Hongqiao Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that China Hongqiao Group Limited has a market capitalization of HK$108b, and reported total annual CEO compensation of CN¥1.0m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥187k.

For comparison, other companies in the Hong Kong Metals and Mining industry with market capitalizations above HK$63b, reported a median total CEO compensation of CN¥3.2m. This suggests that Bo Zhang is paid below the industry median. Furthermore, Bo Zhang directly owns HK$101m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥187k	CN¥177k	19%
Other	CN¥820k	CN¥815k	81%
Total Compensation	CN¥1.0m	CN¥992k	100%

Talking in terms of the industry, salary represented approximately 88% of total compensation out of all the companies we analyzed, while other remuneration made up 12% of the pie. China Hongqiao Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at China Hongqiao Group Limited's Growth Numbers

Earnings per share at China Hongqiao Group Limited are much the same as they were three years ago, albeit slightly lower. Its revenue is up 1.5% over the last year.

The lack of EPS growth is certainly uninspiring. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Hongqiao Group Limited Been A Good Investment?

China Hongqiao Group Limited has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for China Hongqiao Group that investors should look into moving forward.

Important note: China Hongqiao Group 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.