This Is Why China New City Group Limited's (HKG:1321) CEO Compensation Looks Appropriate

Key Insights

• China New City Group to hold its Annual General Meeting on 6th of June
• Total pay for CEO Nanlu Shi includes CN¥933.0k salary
• The overall pay is 71% below the industry average
• Over the past three years, China New City Group's EPS fell by 44% and over the past three years, the total loss to shareholders 17%

Shareholders may be wondering what CEO Nanlu Shi plans to do to improve the less than great performance at China New City Group Limited (HKG:1321) recently. 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 6th of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for China New City Group

Comparing China New City Group Limited's CEO Compensation With The Industry

According to our data, China New City Group Limited has a market capitalization of HK$1.6b, and paid its CEO total annual compensation worth CN¥933k over the year to December 2023. That's a slight decrease of 7.1% on the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥933k.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations ranging from HK$782m to HK$3.1b, the reported median CEO total compensation was CN¥3.2m. That is to say, Nanlu Shi is paid under the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥933k	CN¥1.0m	100%
Other	-	-	-
Total Compensation	CN¥933k	CN¥1.0m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. On a company level, China New City Group prefers to reward its CEO through a salary, opting not to pay Nanlu Shi through 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 China New City Group Limited's Growth Numbers

Over the last three years, China New City Group Limited has shrunk its earnings per share by 44% per year. It achieved revenue growth of 119% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 China New City Group Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in China New City Group Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

China New City Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders are sitting on a loss is certainly disheartening. The poor performance of the share price might have something to do with the lack of earnings growth. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for China New City Group that investors should be aware of in a dynamic business environment.

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.