Should Shareholders Worry About Chen Xing Development Holdings Limited's (HKG:2286) CEO Compensation Package?

Key Insights

• Chen Xing Development Holdings to hold its Annual General Meeting on 30th of May
• Salary of CN¥510.0k is part of CEO Wukui Bai's total remuneration
• The total compensation is 68% less than the average for the industry
• Chen Xing Development Holdings' EPS declined by 111% over the past three years while total shareholder loss over the past three years was 89%

The disappointing performance at Chen Xing Development Holdings Limited (HKG:2286) will make some shareholders rather disheartened. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 30th of May. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for Chen Xing Development Holdings

Comparing Chen Xing Development Holdings Limited's CEO Compensation With The Industry

According to our data, Chen Xing Development Holdings Limited has a market capitalization of HK$117m, and paid its CEO total annual compensation worth CN¥547k over the year to December 2023. That's a notable increase of 18% on last year. We note that the salary portion, which stands at CN¥510.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.7m. That is to say, Wukui Bai is paid under the industry median. Moreover, Wukui Bai also holds HK$13m worth of Chen Xing Development Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥510k	CN¥433k	93%
Other	CN¥37k	CN¥31k	7%
Total Compensation	CN¥547k	CN¥464k	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Chen Xing Development Holdings pays out 93% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Chen Xing Development Holdings Limited's Growth

Over the last three years, Chen Xing Development Holdings Limited has shrunk its earnings per share by 111% per year. In the last year, its revenue is down 75%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Chen Xing Development Holdings Limited Been A Good Investment?

The return of -89% over three years would not have pleased Chen Xing Development Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Chen Xing Development Holdings you should be aware of, and 2 of them are a bit unpleasant.

Important note: Chen Xing Development 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.