Fineland Real Estate Services Group Limited's (HKG:9978) CEO Will Probably Have Their Compensation Approved By Shareholders

By
Simply Wall St
Published
May 21, 2021
SEHK:9978
Source: Shutterstock

It would be hard to discount the role that CEO Haiming Rong has played in delivering the impressive results at Fineland Real Estate Services Group Limited (HKG:9978) recently. Coming up to the next AGM on 28 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for Fineland Real Estate Services Group

How Does Total Compensation For Haiming Rong Compare With Other Companies In The Industry?

According to our data, Fineland Real Estate Services Group Limited has a market capitalization of HK$240m, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2020. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥786.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.5m. From this we gather that Haiming Rong is paid around the median for CEOs in the industry. Moreover, Haiming Rong also holds HK$16m worth of Fineland Real Estate Services Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary CN¥786k CN¥779k 63%
Other CN¥466k CN¥483k 37%
Total CompensationCN¥1.3m CN¥1.3m100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Fineland Real Estate Services Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
SEHK:9978 CEO Compensation May 21st 2021

A Look at Fineland Real Estate Services Group Limited's Growth Numbers

Over the past three years, Fineland Real Estate Services Group Limited has seen its earnings per share (EPS) grow by 32% per year. In the last year, its revenue is up 8.0%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Fineland Real Estate Services Group Limited Been A Good Investment?

We think that the total shareholder return of 43%, over three years, would leave most Fineland Real Estate Services Group Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Fineland Real Estate Services Group that investors should look into moving forward.

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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