Key Insights

• Kaisa Group Holdings' Annual General Meeting to take place on 25th of June
• CEO Fan Mai's total compensation includes salary of CN¥3.75m
• The total compensation is 127% higher than the average for the industry
• Kaisa Group Holdings' EPS declined by 62% over the past three years while total shareholder loss over the past three years was 96%

The results at Kaisa Group Holdings Ltd. (HKG:1638) have been quite disappointing recently and CEO Fan Mai bears some responsibility for this. At the upcoming AGM on 25th of June, shareholders can hear from the board including their plans for turning around performance. 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.

Comparing Kaisa Group Holdings Ltd.'s CEO Compensation With The Industry

Our data indicates that Kaisa Group Holdings Ltd. has a market capitalization of HK$912m, and total annual CEO compensation was reported as CN¥3.8m for the year to December 2023. Notably, that's a decrease of 54% over the year before. Notably, the salary which is CN¥3.75m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.7m. This suggests that Fan Mai is paid more than the median for the industry.

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Kaisa Group Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

Kaisa Group Holdings Ltd.'s Growth

Over the last three years, Kaisa Group Holdings Ltd. has shrunk its earnings per share by 62% per year. In the last year, its revenue is up 3.0%.

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. 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 Kaisa Group Holdings Ltd. Been A Good Investment?

Few Kaisa Group Holdings Ltd. shareholders would feel satisfied with the return of -96% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Kaisa Group Holdings pays its CEO a majority of compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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 2 warning signs (and 1 which shouldn't be ignored) in Kaisa Group Holdings we think you should know about.

Important note: Kaisa Group 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com