Should Shareholders Reconsider Shanghai Dazhong Public Utilities(Group) Co.,Ltd.'s (SHSE:600635) CEO Compensation Package?

Key Insights

• Shanghai Dazhong Public Utilities(Group)Ltd's Annual General Meeting to take place on 18th of June
• CEO Jiawei Liang's total compensation includes salary of CN¥2.29m
• Total compensation is 169% above industry average
• Over the past three years, Shanghai Dazhong Public Utilities(Group)Ltd's EPS fell by 50% and over the past three years, the total loss to shareholders 21%

The results at Shanghai Dazhong Public Utilities(Group) Co.,Ltd. (SHSE:600635) have been quite disappointing recently and CEO Jiawei Liang bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 18th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Shanghai Dazhong Public Utilities(Group)Ltd

How Does Total Compensation For Jiawei Liang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shanghai Dazhong Public Utilities(Group) Co.,Ltd. has a market capitalization of CN¥7.5b, and reported total annual CEO compensation of CN¥2.9m for the year to December 2023. That's a notable increase of 27% on last year. We note that the salary portion, which stands at CN¥2.29m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the Chinese Gas Utilities industry with market capitalizations between CN¥2.9b and CN¥12b, we discovered that the median CEO total compensation of that group was CN¥1.1m. This suggests that Jiawei Liang is paid more than the median for the industry. What's more, Jiawei Liang holds CN¥616k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	CN¥2.3m	CN¥2.5m	79%
Other	CN¥625k		21%
Total Compensation	CN¥2.9m	CN¥2.3m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Shanghai Dazhong Public Utilities(Group)Ltd is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Shanghai Dazhong Public Utilities(Group) Co.,Ltd.'s Growth

Over the last three years, Shanghai Dazhong Public Utilities(Group) Co.,Ltd. has shrunk its earnings per share by 50% per year. Its revenue is up 6.7% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Shanghai Dazhong Public Utilities(Group) Co.,Ltd. Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Shanghai Dazhong Public Utilities(Group) Co.,Ltd. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Shanghai Dazhong Public Utilities(Group)Ltd that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.