Shareholders Will Probably Be Cautious Of Increasing Xinji Shaxi Group Co., Ltd's (HKG:3603) CEO Compensation At The Moment

Key Insights

• Xinji Shaxi Group to hold its Annual General Meeting on 30th of May
• CEO Hon Chuen Cheung's total compensation includes salary of CN¥547.0k
• Total compensation is 50% below industry average
• Xinji Shaxi Group's EPS declined by 49% over the past three years while total shareholder loss over the past three years was 95%

Performance at Xinji Shaxi Group Co., Ltd (HKG:3603) has not been particularly rosy recently and shareholders will likely be holding CEO Hon Chuen Cheung and the board accountable for this. At the upcoming AGM on 30th of May, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Xinji Shaxi Group

How Does Total Compensation For Hon Chuen Cheung Compare With Other Companies In The Industry?

At the time of writing, our data shows that Xinji Shaxi Group Co., Ltd has a market capitalization of HK$91m, and reported total annual CEO compensation of CN¥849k for the year to December 2023. We note that's a small decrease of 6.2% on last year. In particular, the salary of CN¥547.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.7m. In other words, Xinji Shaxi Group pays its CEO lower than the industry median. Moreover, Hon Chuen Cheung also holds HK$35m worth of Xinji Shaxi Group 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¥547k	CN¥607k	64%
Other	CN¥302k	CN¥298k	36%
Total Compensation	CN¥849k	CN¥905k	100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Xinji Shaxi Group pays a modest slice of remuneration through salary, as compared to the broader industry. 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.

Xinji Shaxi Group Co., Ltd's Growth

Over the last three years, Xinji Shaxi Group Co., Ltd has shrunk its earnings per share by 49% per year. In the last year, its revenue is down 8.4%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Xinji Shaxi Group Co., Ltd Been A Good Investment?

The return of -95% over three years would not have pleased Xinji Shaxi Group Co., Ltd shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Xinji Shaxi Group we think you should know about.

Important note: Xinji Shaxi Group 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.