We Discuss Why Xinda Investment Holdings Limited's (HKG:1281) CEO Compensation May Be Closely Reviewed

Key Insights

• Xinda Investment Holdings' Annual General Meeting to take place on 31st of May
• Total pay for CEO Qiang Wei includes CN¥1.76m salary
• The total compensation is similar to the average for the industry
• Over the past three years, Xinda Investment Holdings' EPS fell by 28% and over the past three years, the total loss to shareholders 66%

Xinda Investment Holdings Limited (HKG:1281) has not performed well recently and CEO Qiang Wei will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 31st of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Xinda Investment Holdings

How Does Total Compensation For Qiang Wei Compare With Other Companies In The Industry?

Our data indicates that Xinda Investment Holdings Limited has a market capitalization of HK$105m, and total annual CEO compensation was reported as CN¥1.8m for the year to December 2023. That's just a smallish increase of 4.8% on last year. Notably, the salary which is CN¥1.76m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Renewable Energy industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.9m. So it looks like Xinda Investment Holdings compensates Qiang Wei in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.8m	CN¥1.7m	99%
Other	CN¥16k	CN¥15k	1%
Total Compensation	CN¥1.8m	CN¥1.7m	100%

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. Xinda Investment Holdings has gone down a largely traditional route, paying Qiang Wei 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.

A Look at Xinda Investment Holdings Limited's Growth Numbers

Xinda Investment Holdings Limited has reduced its earnings per share by 28% a year over the last three years. It saw its revenue drop 42% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Xinda Investment Holdings Limited Been A Good Investment?

With a total shareholder return of -66% over three years, Xinda Investment Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Xinda Investment Holdings pays its CEO a majority of compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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 pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Xinda Investment Holdings we think you should know about.

Important note: Xinda Investment Holdings 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.