Should Shareholders Reconsider Golden Wheel Tiandi Holdings Company Limited's (HKG:1232) CEO Compensation Package?

Key Insights

• Golden Wheel Tiandi Holdings will host its Annual General Meeting on 29th of May
• CEO Kam Fai Wong's total compensation includes salary of CN¥3.99m
• The total compensation is 144% higher than the average for the industry
• Over the past three years, Golden Wheel Tiandi Holdings' EPS fell by 30% and over the past three years, the total loss to shareholders 83%

The results at Golden Wheel Tiandi Holdings Company Limited (HKG:1232) have been quite disappointing recently and CEO Kam Fai Wong bears some responsibility for this. At the upcoming AGM on 29th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Golden Wheel Tiandi Holdings

Comparing Golden Wheel Tiandi Holdings Company Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Golden Wheel Tiandi Holdings Company Limited has a market capitalization of HK$160m, and reported total annual CEO compensation of CN¥4.1m for the year to December 2023. We note that's an increase of 18% above last year. We note that the salary portion, which stands at CN¥3.99m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.7m. This suggests that Kam Fai Wong is paid more than the median for the industry. Moreover, Kam Fai Wong also holds HK$1.3m worth of Golden Wheel Tiandi Holdings stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	CN¥4.0m	CN¥3.4m	96%
Other	CN¥146k	CN¥132k	4%
Total Compensation	CN¥4.1m	CN¥3.5m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Golden Wheel Tiandi Holdings has gone down a largely traditional route, paying Kam Fai Wong a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Golden Wheel Tiandi Holdings Company Limited's Growth Numbers

Over the last three years, Golden Wheel Tiandi Holdings Company Limited has shrunk its earnings per share by 30% per year. In the last year, its revenue is down 10%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Golden Wheel Tiandi Holdings Company Limited Been A Good Investment?

With a total shareholder return of -83% over three years, Golden Wheel Tiandi Holdings Company Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Kam Fai receives almost all of their compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Golden Wheel Tiandi Holdings (2 shouldn't be ignored!) that you should be aware of before investing here.

Important note: Golden Wheel Tiandi Holdings 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.