It's Unlikely That The CEO Of Sinofortune Financial Holdings Limited (HKG:8123) Will See A Huge Pay Rise This Year

Shareholders of Sinofortune Financial Holdings Limited (HKG:8123) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23 June 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Sinofortune Financial Holdings

How Does Total Compensation For Jiawei Wang Compare With Other Companies In The Industry?

Our data indicates that Sinofortune Financial Holdings Limited has a market capitalization of HK$178m, and total annual CEO compensation was reported as HK$1.8m for the year to December 2020. This was the same as last year. Notably, the salary which is HK$1.80m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.8m. So it looks like Sinofortune Financial Holdings compensates Jiawei Wang in line with the median for the industry. Moreover, Jiawei Wang also holds HK$48m worth of Sinofortune Financial Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	HK$1.8m	HK$1.8m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.8m	HK$1.8m	100%

Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 9% is other remuneration. Sinofortune Financial Holdings has gone down a largely traditional route, paying Jiawei Wang a high salary, giving it preference over non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Sinofortune Financial Holdings Limited's Growth

Sinofortune Financial Holdings Limited has seen its earnings per share (EPS) increase by 31% a year over the past three years. Its revenue is down 86% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Sinofortune Financial Holdings Limited Been A Good Investment?

With a total shareholder return of -60% over three years, Sinofortune Financial Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Jiawei receives almost all of their compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Sinofortune Financial Holdings that you should be aware of before investing.

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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