Does Hanwei Energy Services Corp.’s (TSE:HE) CEO Pay Reflect Performance?

Fulai Lang became the CEO of Hanwei Energy Services Corp. (TSE:HE) in 2006. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Hanwei Energy Services

How Does Fulai Lang’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Hanwei Energy Services Corp. has a market cap of CA$4.9m, and is paying total annual CEO compensation of CA$125k. (This number is for the twelve months until March 2018). Notably, the salary of CA$125k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below CA$267m. The median CEO total compensation in that group is CA$143k.

That means Fulai Lang receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Hanwei Energy Services, below.

TSX:HE CEO Compensation, April 17th 2019
TSX:HE CEO Compensation, April 17th 2019

Is Hanwei Energy Services Corp. Growing?

Over the last three years Hanwei Energy Services Corp. has grown its earnings per share (EPS) by an average of 49% per year (using a line of best fit). Its revenue is up 7.9% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hanwei Energy Services Corp. Been A Good Investment?

Since shareholders would have lost about 44% over three years, some Hanwei Energy Services Corp. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Remuneration for Fulai Lang is close enough to the median pay for a CEO of a similar sized company .

We think that the EPS growth is very pleasing, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Hanwei Energy Services.

Important note: Hanwei Energy Services may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.