Here's Why RENHENG Enterprise Holdings Limited's (HKG:3628) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• RENHENG Enterprise Holdings will host its Annual General Meeting on 25th of June
• Salary of HK$1.22m is part of CEO Li Liu's total remuneration
• The overall pay is 47% below the industry average
• RENHENG Enterprise Holdings' three-year loss to shareholders was 39% while its EPS grew by 114% over the past three years

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Performance at RENHENG Enterprise Holdings Limited (HKG:3628) has been rather uninspiring recently and shareholders may be wondering how CEO Li Liu plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 25th of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for RENHENG Enterprise Holdings

How Does Total Compensation For Li Liu Compare With Other Companies In The Industry?

According to our data, RENHENG Enterprise Holdings Limited has a market capitalization of HK$88m, and paid its CEO total annual compensation worth HK$1.2m over the year to December 2024. This was the same amount the CEO received in the prior year. Notably, the salary which is HK$1.22m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Machinery industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.3m. In other words, RENHENG Enterprise Holdings pays its CEO lower than the industry median. Furthermore, Li Liu directly owns HK$66m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$1.2m	HK$1.2m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.2m	HK$1.2m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. RENHENG Enterprise Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at RENHENG Enterprise Holdings Limited's Growth Numbers

RENHENG Enterprise Holdings Limited's earnings per share (EPS) grew 114% per year over the last three years. It saw its revenue drop 7.7% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has RENHENG Enterprise Holdings Limited Been A Good Investment?

With a total shareholder return of -39% over three years, RENHENG Enterprise Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

RENHENG Enterprise Holdings pays its CEO a majority of compensation through a salary. The loss to shareholders over the past three years is certainly concerning. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

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 2 warning signs for RENHENG Enterprise Holdings that investors should look into moving forward.

Important note: RENHENG Enterprise 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.