Text: Xiangshan Finance
Recently, Greentown China Holdings Limited (Greentown China) issued an announcement disclosing unaudited operating data for the first seven months of this year.
According to the announcement, Greentown China sold 2,826 sets in a single month in July, with a sales area of about 360,000 square meters, sales of 10.6 billion yuan in the month, and an average sales price of about 29,755 yuan per square meter. To be honest, this performance is not bad in the current market environment.
However, it is a pity that if we look at the overall performance of the first seven months, Greentown China's cumulative total contracted sales area reached about 7.04 million square meters, and the total contracted sales were 147.5 billion yuan. Subsequently, some media pointed out that this sales fell by 3.2% year-on-year.
This shows that Greentown China's business pressure is still very high, and the entire real estate industry is still living a tight and hard life.
But the more this is the case, the more investors are dissatisfied, as Greentown China's executive pay is far ahead of a group of state-owned developers, which has been criticized by the outside world in recent years.
Especially in the context of a sharp decline in the cash dividend ratio in 2023, it is indeed inevitable to give people a feeling:
Greentown China's front-line market is tight, and the back-line executives are tight......
Zhang Yadong and Guo Jiafeng's annual salaries exceed 10 million, are they worthy of Greentown China's performance?
According to Greentown China's annual report, in 2023, the salary of Zhang Yadong, chairman of the board of directors of Greentown China, will be 12.171 million yuan, the salary of Guo Jiafeng, executive director and chief executive officer, will be 10.744 million yuan, and the annual salary of other senior executives, such as executive directors Wu Wende, Geng Zhongqiang, Li Jun and other executives, will be 4.205 million yuan;
Zhang Yadong, Chairman of the Board of Directors of Greentown China
In 2022, the annual salaries of Zhang Yadong and Guo Jiafeng will be 12.345 million yuan and 10.763 million yuan respectively, while the annual salaries of executives such as Wu Wende and Geng Zhongqiang will be 4.419 million yuan.
Obviously, Greentown China seems to have noticed the dissatisfaction of investors, so the compensation level of senior executives in 2023 has been slightly lower than in 2022.
The problem is that this adjustment is almost a drop in the bucket. If we look at the horizontal comparison, the salary level of Greentown China's main executives (chairman and chief executive officer) is still high, and it can almost still rank among the top three listed real estate companies, second only to Longfor and Shui On Land.
In addition, among many developers with the background of state-owned enterprises, the annual remuneration of Greentown China's key executives is also far ahead. Taking 2023 as an example, China Resources Land, which ranks second in the list of major executive salaries of state-owned developers, is far lower than Greentown China's salary level.
Among them, Zhang Yadong, chairman (chairman of the board of directors) of Greentown China, is 12.17 million yuan, while China Resources Land's is only 7.325 million yuan, nearly 5 million yuan less than the former, Guo Jiafeng, CEO of Greentown China, has an annual salary of 10.74 million yuan, and many presidents of China Resources Land are basically around 7 million yuan, which is also a huge gap.
So with such a high salary, Zhang Yadong should have helped Greentown China achieve good performance, right?
According to the Tianyancha APP, from 2019 to 2023, Greentown China's revenue will increase from 61.59 billion yuan to 131.4 billion yuan, which is actually quite good.
But in terms of profitability, it is somewhat unsatisfactory. In terms of gross profit, it fell by 0.43% year-on-year in 2020, and in 2023, it will not only decrease significantly by 22.47% year-on-year, but also only achieve a scale of 17.07 billion yuan, almost regressing to the gross profit level in 2021, and in terms of net profit, Greentown China's profit (profit after tax) for the year in 2023 will be 6.678 billion yuan, which is also 25% lower than 8.895 billion yuan in 2022.
In this case, Greentown China's corresponding gross profit margin also fell from 25.39% in 2019 to 12.99% last year. The net profit margin fell from a high of 8.76% in 2020 to 5.08% for three consecutive years.
Obviously, Zhang Yadong has indeed made a lot of achievements for Greentown China, but his performance is average in terms of the most critical profit.
Perhaps because of this, although Greentown China has insisted on continuous cash dividends in recent years, the dividend ratio has declined sharply.
According to Flush data, in 2019, Greentown China's cash dividends accounted for 62.7% of the net profit attributable to the parent company, 35.29% in 2020 and 35.35% in 2021, and rebounded to 48.99% in 2022. Then in 2023, it will drop to 35.22%, a decrease of nearly 14 percentage points from the previous year!
In this case, it is indeed not difficult to understand that investors will have opinions on Greentown China's executive compensation......
Zhang Yadong, how far is it from becoming "Yu Liang"?
Of course, it is undeniable that Zhang Yadong's remuneration was negotiated and approved by the remuneration committee of Greentown China. And he did make a lot of revenue achievements during his tenure, so the high salary itself is reasonable.
It's just that in the current context of the pressure on the entire real estate industry and the hard life of the corresponding head investors, even if Zhang Yadong's high salary is reasonable, he should also learn to avoid suspicion moderately.
After all, in this regard, in 2022, the annual salary of Yang Mingyao, the new CEO of CCRE, has been reduced to 2 million yuan, as well as 3.3 million share options, which has been significantly halved from the 5 million Hong Kong dollars (about 4.1 million yuan) and 27 million share options of the former CEO Wang Jun.
Subsequently, at Vanke's 2022 annual meeting, Yu Liang, chairman of the board of directors, also said that the real estate industry has reached the era of black iron, and today there is no ability to bid, and people who are only motivated by money are not suitable to work in the industry in the era of black iron.
Therefore, some time ago, after Vanke Group released the 2023 annual results announcement with both revenue and net profit declining, the management of Vanke Group collectively chose to reduce salaries:
In 2023, 8 directors, supervisors and senior managers who worked full-time in Vanke Group voluntarily waived their 2023 bonuses, and received a total of RMB 7.661 million in pre-tax remuneration from Vanke Group during their tenure in 2023, and 4 independent directors received a total of RMB 1.5 million in pre-tax remuneration from Vanke Group during their tenure as directors in 2023.
At the same time, from the date of disclosure of the report (March 28, 2024), Yu Liang, Chairman of the Board of Directors, Zhu Jiusheng, President, and Chairman of the Board of Supervisors will unfreeze and voluntarily receive a monthly salary of 10,000 yuan before tax......
So far, the total pre-tax remuneration of Vanke Group's management in 2023 has dropped to 9.16 million yuan, a decrease of 73.6% from 34.66 million yuan in 2022.
So the question is, Vanke Yu Liang, can't Jianye executives really strive for high salaries for themselves?
Obviously, yes. After all, in A-shares, the company has suffered huge losses, but there are not a few companies whose founders and executives still hold year-end bonuses of tens of millions or even 100 million yuan.
But now Vanke executives have taken the initiative to choose to cut salaries, so no matter what the purpose, on the one hand, in the eyes of investors, this is indeed a bit of a tribulation, and it also means that the executives are not lying down and are willing to continue to work hard for the future; On the other hand, the salary gap will not be too large internally, so as to avoid further affecting the development enthusiasm of employees during the downturn of the industry......
In contrast, the high salaries of Greentown China and Zhang Yadong are naturally a bit eye-catching in the eyes of shareholders and investors whose own interests have been damaged!
So I think that even if Zhang Yadong's high salary is not wrong, Greentown China may be able to change the way of incentives.
For example, more share incentives will be issued in lieu of cash annual salaries, and the interests of senior executives will be truly bound to shareholders and the business development of Greentown China, so that even if Greentown China's performance declines and the dividend ratio continues to decrease, I am afraid it can also bring unlimited encouragement and incentives to the capital market!
In short, under the condition that the real estate industry continues to be under pressure and the executives of major real estate companies have taken the lead in cutting salaries, unless Greentown China can maintain continuous improvement in performance, the market criticism of the high salaries of the chairman and president may continue to continue......
Disclaimer: This article is based on the company's statutory disclosures and public information, but the author does not guarantee the completeness and timeliness of the information. Another: The stock market is risky, and you need to be cautious when entering the market. The article does not constitute investment advice, and whether to invest or not should be determined by yourself.