Shareholders Will Probably Hold Off On Increasing Sinofortune Financial Holdings Limited's (HKG:8123) CEO Compensation For The Time Being

Key Insights

• Sinofortune Financial Holdings' Annual General Meeting to take place on 25th of June
• Total pay for CEO Jiawei Wang includes HK$1.80m salary
• The total compensation is similar to the average for the industry
• Sinofortune Financial Holdings' three-year loss to shareholders was 60% while its EPS grew by 16% over the past three years

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. The AGM coming up on the 25th of June could be an opportunity for shareholders to bring these concerns to the board's attention. 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

Comparing Sinofortune Financial Holdings Limited's CEO Compensation With The Industry

Our data indicates that Sinofortune Financial Holdings Limited has a market capitalization of HK$77m, and total annual CEO compensation was reported as HK$1.8m for the year to December 2023. There was no change in the compensation compared to last year. Notably, the salary which is HK$1.80m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Specialty Retail industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.7m. This suggests that Sinofortune Financial Holdings remunerates its CEO largely in line with the industry average. Furthermore, Jiawei Wang directly owns HK$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$1.8m	HK$1.8m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.8m	HK$1.8m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Sinofortune Financial Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Sinofortune Financial Holdings Limited's Growth

Sinofortune Financial Holdings Limited has seen its earnings per share (EPS) increase by 16% a year over the past three years. It saw its revenue drop 17% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Jiawei receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Sinofortune Financial Holdings that you should be aware of before investing.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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