Should Shareholders Reconsider Jingrui Holdings Limited's (HKG:1862) CEO Compensation Package?

Key Insights

• Jingrui Holdings to hold its Annual General Meeting on 18th of June
• CEO Hao Yan's total compensation includes salary of CN¥1.32m
• Total compensation is similar to the industry average
• Over the past three years, Jingrui Holdings' EPS fell by 89% and over the past three years, the total loss to shareholders 96%

Jingrui Holdings Limited (HKG:1862) has not performed well recently and CEO Hao Yan will probably need to up their game. At the upcoming AGM on 18th of June, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Jingrui Holdings

Comparing Jingrui Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Jingrui Holdings Limited has a market capitalization of HK$145m, and reported total annual CEO compensation of CN¥1.4m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is CN¥1.32m, represents most of the total compensation being paid.

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. So it looks like Jingrui Holdings compensates Hao Yan in line with the median for the industry. What's more, Hao Yan holds HK$58m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.3m	CN¥1.3m	94%
Other	CN¥86k	CN¥77k	6%
Total Compensation	CN¥1.4m	CN¥1.4m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Jingrui Holdings pays out 94% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Jingrui Holdings Limited's Growth

Over the last three years, Jingrui Holdings Limited has shrunk its earnings per share by 89% per year. Its revenue is down 7.8% over the previous year.

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. 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 Jingrui Holdings Limited Been A Good Investment?

Few Jingrui Holdings Limited shareholders would feel satisfied with the return of -96% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which make us uncomfortable) in Jingrui Holdings we think you should know about.

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.