Shareholders May Be More Conservative With Modern Land (China) Co., Limited's (HKG:1107) CEO Compensation For Now

The underwhelming share price performance of Modern Land (China) Co., Limited (HKG:1107) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 18 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Modern Land (China)

Comparing Modern Land (China) Co., Limited's CEO Compensation With the industry

At the time of writing, our data shows that Modern Land (China) Co., Limited has a market capitalization of HK$2.2b, and reported total annual CEO compensation of CN¥5.9m for the year to December 2020. We note that's an increase of 12% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥2.3m.

On comparing similar companies from the same industry with market caps ranging from HK$776m to HK$3.1b, we found that the median CEO total compensation was CN¥2.2m. Hence, we can conclude that Peng Zhang is remunerated higher than the industry median. Furthermore, Peng Zhang directly owns HK$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CN¥2.3m	CN¥2.6m	40%
Other	CN¥3.6m	CN¥2.7m	60%
Total Compensation	CN¥5.9m	CN¥5.3m	100%

On an industry level, around 71% of total compensation represents salary and 29% is other remuneration. Modern Land (China) pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Modern Land (China) Co., Limited's Growth

Modern Land (China) Co., Limited has seen its earnings per share (EPS) increase by 1.1% a year over the past three years. Its revenue is up 8.1% over the last year.

We'd prefer higher revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Modern Land (China) Co., Limited Been A Good Investment?

The return of -38% over three years would not have pleased Modern Land (China) Co., Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Modern Land (China) you should be aware of, and 1 of them is potentially serious.

Switching gears from Modern Land (China), if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. 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.
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