Should Shareholders Have Second Thoughts About A Pay Rise For Mingfa Group (International) Company Limited's (HKG:846) CEO This Year?

Key Insights

• Mingfa Group (International) will host its Annual General Meeting on 7th of June
• Total pay for CEO Xiaoming Zhong includes CN¥1.62m salary
• The total compensation is 49% less than the average for the industry
• Mingfa Group (International)'s three-year loss to shareholders was 53% while its EPS was down 81% over the past three years

Performance at Mingfa Group (International) Company Limited (HKG:846) has not been particularly rosy recently and shareholders will likely be holding CEO Xiaoming Zhong and the board accountable for this. 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 7th of June. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for Mingfa Group (International)

Comparing Mingfa Group (International) Company Limited's CEO Compensation With The Industry

According to our data, Mingfa Group (International) Company Limited has a market capitalization of HK$1.8b, and paid its CEO total annual compensation worth CN¥1.6m over the year to December 2023. That's just a smallish increase of 4.4% on last year. Notably, the salary of CN¥1.6m is the entirety of the CEO compensation.

On examining similar-sized companies in the Hong Kong Real Estate industry with market capitalizations between HK$782m and HK$3.1b, we discovered that the median CEO total compensation of that group was CN¥3.2m. In other words, Mingfa Group (International) pays its CEO lower than the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.6m	CN¥1.6m	100%
Other	-	-	-
Total Compensation	CN¥1.6m	CN¥1.6m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Speaking on a company level, Mingfa Group (International) prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Mingfa Group (International) Company Limited's Growth

Over the last three years, Mingfa Group (International) Company Limited has shrunk its earnings per share by 81% per year. Its revenue is down 9.9% over the previous 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. 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 Mingfa Group (International) Company Limited Been A Good Investment?

Few Mingfa Group (International) Company Limited shareholders would feel satisfied with the return of -53% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Mingfa Group (International) 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 a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Mingfa Group (International) that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.