Richard He has been the CEO of Helios Energy Limited (ASX:HE8) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Richard He Compare With Other Companies In The Industry?
At the time of writing, our data shows that Helios Energy Limited has a market capitalization of AU$232m, and reported total annual CEO compensation of AU$357k for the year to June 2020. That's just a smallish increase of 6.5% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$357k.
In comparison with other companies in the industry with market capitalizations ranging from AU$138m to AU$550m, the reported median CEO total compensation was AU$851k. In other words, Helios Energy pays its CEO lower than the industry median.
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. At the company level, Helios Energy pays Richard He solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Helios Energy Limited's Growth
Helios Energy Limited has reduced its earnings per share by 65% a year over the last three years. It saw its revenue drop 54% over the last year.
Few shareholders would be pleased to read that EPS have declined. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Helios Energy Limited Been A Good Investment?
Most shareholders would probably be pleased with Helios Energy Limited for providing a total return of 163% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Helios Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Helios Energy Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is negative, shareholder returns have been healthy recently. We would like to see EPS growth, but in our view CEO compensation is modest.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 3 which are a bit unpleasant) in Helios Energy we think you should know about.
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. 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.
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