Shareholders May Be Wary Of Increasing Liaoning Port Co., Ltd.'s (HKG:2880) CEO Compensation Package

Key Insights

• Liaoning Port will host its Annual General Meeting on 27th of June
• CEO Minghui Wei's total compensation includes salary of CN¥1.01m
• The total compensation is similar to the average for the industry
• Liaoning Port's three-year loss to shareholders was 11% while its EPS was down 17% over the past three years

The results at Liaoning Port Co., Ltd. (HKG:2880) have been quite disappointing recently and CEO Minghui Wei bears some responsibility for this. At the upcoming AGM on 27th of June, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Liaoning Port

Comparing Liaoning Port Co., Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Liaoning Port Co., Ltd. has a market capitalization of HK$30b, and reported total annual CEO compensation of CN¥1.0m for the year to December 2023. That's a notable decrease of 8.3% on last year. We note that the salary portion, which stands at CN¥1.01m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Infrastructure industry with market capitalizations ranging from HK$16b to HK$50b, the reported median CEO total compensation was CN¥1.1m. From this we gather that Minghui Wei is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.0m	CN¥1.1m	96%
Other	CN¥38k	CN¥37k	4%
Total Compensation	CN¥1.0m	CN¥1.1m	100%

Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Liaoning Port 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.

A Look at Liaoning Port Co., Ltd.'s Growth Numbers

Over the last three years, Liaoning Port Co., Ltd. has shrunk its earnings per share by 17% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Liaoning Port Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 11% over three years, many shareholders in Liaoning Port Co., Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Minghui receives almost all of their compensation through a salary. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Liaoning Port that investors should think about before committing capital to this stock.

Important note: Liaoning Port is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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