How Should Investors Feel About New City Development Group's (HKG:456) CEO Remuneration?

The CEO of New City Development Group Limited (HKG:456) is Junran Han, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether New City Development Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for New City Development Group

Comparing New City Development Group Limited's CEO Compensation With the industry

According to our data, New City Development Group Limited has a market capitalization of HK$476m, and paid its CEO total annual compensation worth HK$1.3m over the year to December 2019. We note that's a decrease of 32% compared to last year. In particular, the salary of HK$1.30m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.7m. From this we gather that Junran Han is paid around the median for CEOs in the industry. Moreover, Junran Han also holds HK$246m worth of New City Development Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. New City Development Group is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at New City Development Group Limited's Growth Numbers

Over the last three years, New City Development Group Limited has shrunk its earnings per share by 66% per year. It saw its revenue drop 47% over the last 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. These factors suggest that the business performance wouldn't really justify a high pay packet 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 New City Development Group Limited Been A Good Investment?

Given the total shareholder loss of 67% over three years, many shareholders in New City Development Group Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Junran receives almost all of their compensation through a salary. As previously discussed, Junran is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 7 warning signs for New City Development Group (2 are concerning!) that you should be aware of before investing here.

Switching gears from New City Development Group, 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.

If you decide to trade New City Development Group, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.