Key Insights

• New City Development Group's Annual General Meeting to take place on 5th of June
• Salary of HK$1.20m is part of CEO Junran Han's total remuneration
• Total compensation is 34% below industry average
• New City Development Group's three-year loss to shareholders was 89% while its EPS was down 41% over the past three years

Performance at New City Development Group Limited (HKG:456) has not been particularly rosy recently and shareholders will likely be holding CEO Junran Han and the board accountable for this. The next AGM coming up on 5th of June will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

Comparing New City Development Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that New City Development Group Limited has a market capitalization of HK$55m, and reported total annual CEO compensation of HK$1.2m for the year to December 2023. That's a notable decrease of 14% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$1.2m.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.8m. That is to say, Junran Han is paid under the industry median. What's more, Junran Han holds HK$33m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. On a company level, New City Development Group prefers to reward its CEO through a salary, opting not to pay Junran Han through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

New City Development Group Limited's Growth

New City Development Group Limited has reduced its earnings per share by 41% a year over the last three years. It saw its revenue drop 4.0% over the last year.

Overall this is not a very positive result for shareholders. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has New City Development Group Limited Been A Good Investment?

Few New City Development Group Limited shareholders would feel satisfied with the return of -89% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

New City Development Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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 compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 6 warning signs for New City Development Group you should be aware of, and 4 of them can't be ignored.

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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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.