The performance at Xingfa Aluminium Holdings Limited (HKG:98) has been quite strong recently and CEO Yuqing Liao has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 27 May 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.
Comparing Xingfa Aluminium Holdings Limited's CEO Compensation With the industry
According to our data, Xingfa Aluminium Holdings Limited has a market capitalization of HK$4.7b, and paid its CEO total annual compensation worth CN¥2.8m over the year to December 2020. That's a notable increase of 8.7% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥264k.
On examining similar-sized companies in the industry with market capitalizations between HK$3.1b and HK$12b, we discovered that the median CEO total compensation of that group was CN¥2.3m. This suggests that Xingfa Aluminium Holdings remunerates its CEO largely in line with the industry average. Furthermore, Yuqing Liao directly owns HK$535m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. It's interesting to note that Xingfa Aluminium Holdings 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 Xingfa Aluminium Holdings Limited's Growth Numbers
Xingfa Aluminium Holdings Limited's earnings per share (EPS) grew 26% per year over the last three years. Its revenue is up 5.4% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Xingfa Aluminium Holdings Limited Been A Good Investment?
Boasting a total shareholder return of 73% over three years, Xingfa Aluminium Holdings Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Xingfa Aluminium Holdings that investors should look into moving forward.
Switching gears from Xingfa Aluminium Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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