We Think Guangdong Investment Limited's (HKG:270) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Guangdong Investment's Annual General Meeting to take place on 18th of June
• CEO Yinheng Wen's total compensation includes salary of HK$2.24m
• The total compensation is 104% higher than the average for the industry
• Over the past three years, Guangdong Investment's EPS fell by 16% and over the past three years, the total loss to shareholders 51%

Guangdong Investment Limited (HKG:270) has not performed well recently and CEO Yinheng Wen 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 18th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Guangdong Investment

How Does Total Compensation For Yinheng Wen Compare With Other Companies In The Industry?

According to our data, Guangdong Investment Limited has a market capitalization of HK$31b, and paid its CEO total annual compensation worth HK$3.5m over the year to December 2023. We note that's a small decrease of 3.8% on last year. In particular, the salary of HK$2.24m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Water Utilities industry with market capitalizations ranging from HK$16b to HK$50b, the reported median CEO total compensation was HK$1.7m. This suggests that Yinheng Wen is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$2.2m	HK$2.2m	64%
Other	HK$1.2m	HK$1.4m	36%
Total Compensation	HK$3.5m	HK$3.6m	100%

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. It's interesting to note that Guangdong Investment allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Guangdong Investment Limited's Growth

Guangdong Investment Limited has reduced its earnings per share by 16% a year over the last three years. It achieved revenue growth of 9.7% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Guangdong Investment Limited Been A Good Investment?

With a total shareholder return of -51% over three years, Guangdong Investment Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Guangdong Investment that investors should think about before committing capital to this stock.

Switching gears from Guangdong Investment, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.