Shareholders May Be Wary Of Increasing Beijing SinoHytec Co., Ltd.'s (SHSE:688339) CEO Compensation Package

Key Insights

• Beijing SinoHytec will host its Annual General Meeting on 14th of June
• CEO Guoqiang Zhang's total compensation includes salary of CN¥776.0k
• The total compensation is 67% higher than the average for the industry
• Beijing SinoHytec's three-year loss to shareholders was 77% while its EPS was down 49% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Beijing SinoHytec Co., Ltd. (SHSE:688339) recently. At the upcoming AGM on 14th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Beijing SinoHytec

Comparing Beijing SinoHytec Co., Ltd.'s CEO Compensation With The Industry

Our data indicates that Beijing SinoHytec Co., Ltd. has a market capitalization of CN¥5.2b, and total annual CEO compensation was reported as CN¥1.4m for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of CN¥776.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Chinese Machinery industry with market capitalizations between CN¥2.9b and CN¥12b, we discovered that the median CEO total compensation of that group was CN¥816k. Hence, we can conclude that Guoqiang Zhang is remunerated higher than the industry median. What's more, Guoqiang Zhang holds CN¥826m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥776k	CN¥846k	57%
Other	CN¥583k	CN¥502k	43%
Total Compensation	CN¥1.4m	CN¥1.3m	100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. It's interesting to note that Beijing SinoHytec pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Beijing SinoHytec Co., Ltd.'s Growth

Over the last three years, Beijing SinoHytec Co., Ltd. has shrunk its earnings per share by 49% per year. In the last year, its revenue is up 11%.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Beijing SinoHytec Co., Ltd. Been A Good Investment?

With a total shareholder return of -77% over three years, Beijing SinoHytec Co., Ltd. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Beijing SinoHytec that you should be aware of before investing.

Important note: Beijing SinoHytec 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.