Key Insights

• Everbright Grand China Assets' Annual General Meeting to take place on 6th of June
• Total pay for CEO Jia Liu includes CN¥1.30m salary
• Total compensation is 34% above industry average
• Everbright Grand China Assets' three-year loss to shareholders was 27% while its EPS was down 17% over the past three years

The results at Everbright Grand China Assets Limited (HKG:3699) have been quite disappointing recently and CEO Jia Liu bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 6th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing Everbright Grand China Assets Limited's CEO Compensation With The Industry

According to our data, Everbright Grand China Assets Limited has a market capitalization of HK$174m, and paid its CEO total annual compensation worth CN¥2.3m over the year to December 2023. Notably, that's an increase of 10% over the year before. In particular, the salary of CN¥1.30m, makes up a fairly large portion of the total compensation being paid to the CEO.

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. Accordingly, our analysis reveals that Everbright Grand China Assets Limited pays Jia Liu north of the industry median.

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. In Everbright Grand China Assets' case, non-salary compensation represents a greater slice of total remuneration, 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.

Everbright Grand China Assets Limited's Growth

Over the last three years, Everbright Grand China Assets Limited has shrunk its earnings per share by 17% per year. Its revenue is down 11% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Everbright Grand China Assets Limited Been A Good Investment?

With a three year total loss of 27% for the shareholders, Everbright Grand China Assets Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Everbright Grand China Assets (1 is significant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.