Shareholders May Be Wary Of Increasing CIFI Holdings (Group) Co. Ltd.'s (HKG:884) CEO Compensation Package

Key Insights

• CIFI Holdings (Group)'s Annual General Meeting to take place on 28th of November
• Salary of CN¥7.03m is part of CEO Feng Lin's total remuneration
• The total compensation is 139% higher than the average for the industry
• Over the past three years, CIFI Holdings (Group)'s EPS fell by 99% and over the past three years, the total loss to shareholders 95%

Shareholders will probably not be too impressed with the underwhelming results at CIFI Holdings (Group) Co. Ltd. (HKG:884) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 28th of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for CIFI Holdings (Group)

Comparing CIFI Holdings (Group) Co. Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that CIFI Holdings (Group) Co. Ltd. has a market capitalization of HK$2.6b, and reported total annual CEO compensation of CN¥7.2m for the year to December 2022. That's a notable increase of 9.2% on last year. In particular, the salary of CN¥7.03m, 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 ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of CN¥3.0m. Hence, we can conclude that Feng Lin is remunerated higher than the industry median. Furthermore, Feng Lin directly owns HK$68m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	CN¥7.0m	CN¥6.3m	97%
Other	CN¥186k	CN¥273k	3%
Total Compensation	CN¥7.2m	CN¥6.6m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. CIFI Holdings (Group) has gone down a largely traditional route, paying Feng Lin a high salary, giving it preference over non-salary benefits. 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 CIFI Holdings (Group) Co. Ltd.'s Growth Numbers

CIFI Holdings (Group) Co. Ltd. has reduced its earnings per share by 99% a year over the last three years. Its revenue is down 52% over the previous year.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has CIFI Holdings (Group) Co. Ltd. Been A Good Investment?

The return of -95% over three years would not have pleased CIFI Holdings (Group) Co. Ltd. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Feng receives almost all of their compensation through a salary. 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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for CIFI Holdings (Group) (1 is a bit concerning!) that you should be aware of before investing here.

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.