Here's Why Shareholders Should Examine New City Development Group Limited's (HKG:456) CEO Compensation Package More Closely

Key Insights

• New City Development Group's Annual General Meeting to take place on 5th of June
• CEO Junran Han's total compensation includes salary of HK$1.30m
• The overall pay is comparable to the industry average
• Over the past three years, New City Development Group's EPS fell by 17% and over the past three years, the total loss to shareholders 70%

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Shareholders will probably not be too impressed with the underwhelming results at New City Development Group Limited (HKG:456) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 5th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for New City Development Group

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

According to our data, New City Development Group Limited has a market capitalization of HK$67m, and paid its CEO total annual compensation worth HK$1.3m over the year to December 2024. We note that's an increase of 8.3% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$1.3m.

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 HK$1.6m. This suggests that New City Development Group remunerates its CEO largely in line with the industry average. Furthermore, Junran Han directly owns HK$37m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. At the company level, New City Development Group pays Junran Han solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at New City Development Group Limited's Growth Numbers

Over the last three years, New City Development Group Limited has shrunk its earnings per share by 17% per year. In the last year, its revenue is down 43%.

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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has New City Development Group Limited Been A Good Investment?

Few New City Development Group Limited shareholders would feel satisfied with the return of -70% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

New City Development Group pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for New City Development Group (2 don't sit too well with us!) that you should be aware of before investing here.

Important note: New City Development 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.