Should Shareholders Have Second Thoughts About A Pay Rise For New City Development Group Limited's (HKG:456) CEO This Year?

Key Insights

• New City Development Group will host its Annual General Meeting on 5th of June
• Total pay for CEO Junran Han includes HK$1.20m salary
• Total compensation is 34% below industry average
• Over the past three years, New City Development Group's EPS fell by 41% and over the past three years, the total loss to shareholders 89%

The underwhelming performance at New City Development Group Limited (HKG:456) recently has probably not pleased shareholders. The next AGM coming up on 5th of June will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for New City Development Group

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

Our data indicates that New City Development Group Limited has a market capitalization of HK$55m, and total annual CEO compensation was reported as HK$1.2m for the year to December 2023. We note that's a decrease of 14% compared to last year. Notably, the salary of HK$1.2m is the entirety of the CEO compensation.

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$1.8m. In other words, New City Development Group pays its CEO lower than the industry median. What's more, Junran Han holds HK$33m 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	HK$1.2m	HK$1.4m	100%
Other	-	HK$2.0k	-
Total Compensation	HK$1.2m	HK$1.4m	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. At the company level, New City Development Group pays Junran Han solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

New City Development Group Limited's Growth

New City Development Group Limited has reduced its earnings per share by 41% a year over the last three years. It saw its revenue drop 4.0% over the last year.

The decline in EPS is a bit concerning. 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. 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 New City Development Group Limited Been A Good Investment?

Few New City Development Group Limited shareholders would feel satisfied with the return of -89% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

New City Development Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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 compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 6 warning signs for New City Development Group (4 are a bit concerning!) that you should be aware of before investing here.

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.