We Think Shareholders May Want To Consider A Review Of Guorui Properties Limited's (HKG:2329) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at Guorui Properties Limited (HKG:2329) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30 June 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Guorui Properties

How Does Total Compensation For Zhangsun Zhang Compare With Other Companies In The Industry?

According to our data, Guorui Properties Limited has a market capitalization of HK$1.6b, and paid its CEO total annual compensation worth CN¥3.0m over the year to December 2020. There was no change in the compensation compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥3.0m.

For comparison, other companies in the same industry with market capitalizations ranging between HK$777m and HK$3.1b had a median total CEO compensation of CN¥2.3m. This suggests that Guorui Properties remunerates its CEO largely in line with the industry average. Furthermore, Zhangsun Zhang directly owns HK$1.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CN¥3.0m	CN¥3.0m	100%
Other	-	-	-
Total Compensation	CN¥3.0m	CN¥3.0m	100%

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. At the company level, Guorui Properties pays Zhangsun Zhang 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 Guorui Properties Limited's Growth Numbers

Over the last three years, Guorui Properties Limited has shrunk its earnings per share by 62% per year. It saw its revenue drop 29% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Guorui Properties Limited Been A Good Investment?

The return of -85% over three years would not have pleased Guorui Properties Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Guorui Properties rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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 did our research and identified 5 warning signs (and 2 which are significant) in Guorui Properties we think you should know about.

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. 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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