Key Insights

• Fosun International will host its Annual General Meeting on 6th of June
• Salary of CN¥6.42m is part of CEO Qiyu Chen's total remuneration
• Total compensation is 1,032% above industry average
• Fosun International's three-year loss to shareholders was 61% while its EPS was down 44% over the past three years

The results at Fosun International Limited (HKG:656) have been quite disappointing recently and CEO Qiyu Chen bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 6th 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

How Does Total Compensation For Qiyu Chen Compare With Other Companies In The Industry?

Our data indicates that Fosun International Limited has a market capitalization of HK$36b, and total annual CEO compensation was reported as CN¥54m for the year to December 2023. We note that's a decrease of 9.4% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥6.4m.

In comparison with other companies in the Hong Kong Industrials industry with market capitalizations ranging from HK$16b to HK$50b, the reported median CEO total compensation was CN¥4.8m. Accordingly, our analysis reveals that Fosun International Limited pays Qiyu Chen north of the industry median. What's more, Qiyu Chen holds HK$52m 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 88% of total compensation represents salary, while the remainder of 12% is other remuneration. In Fosun International's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Fosun International Limited's Growth Numbers

Over the last three years, Fosun International Limited has shrunk its earnings per share by 44% per year. In the last year, its revenue is up 8.6%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Fosun International Limited Been A Good Investment?

With a total shareholder return of -61% over three years, Fosun International Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Fosun International that investors should look into moving forward.

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.