Here's Why We Think Tianneng Power International Limited's (HKG:819) CEO Compensation Looks Fair for the time being

Key Insights

• Tianneng Power International's Annual General Meeting to take place on 16th of May
• Salary of CN¥2.07m is part of CEO Tianren Zhang's total remuneration
• The total compensation is similar to the average for the industry
• Tianneng Power International's total shareholder return over the past three years was 14% while its EPS was down 4.2% over the past three years

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The share price of Tianneng Power International Limited (HKG:819) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. The upcoming AGM on 16th of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Tianneng Power International

Comparing Tianneng Power International Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Tianneng Power International Limited has a market capitalization of HK$7.1b, and reported total annual CEO compensation of CN¥2.1m for the year to December 2024. We note that's an increase of 38% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥2.1m.

For comparison, other companies in the Hong Kong Auto Components industry with market capitalizations ranging between HK$3.1b and HK$12b had a median total CEO compensation of CN¥2.1m. This suggests that Tianneng Power International remunerates its CEO largely in line with the industry average. What's more, Tianren Zhang holds HK$2.6b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. At the company level, Tianneng Power International pays Tianren Zhang 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.

A Look at Tianneng Power International Limited's Growth Numbers

Over the last three years, Tianneng Power International Limited has shrunk its earnings per share by 4.2% per year. In the last year, its revenue is down 8.6%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Tianneng Power International Limited Been A Good Investment?

With a total shareholder return of 14% over three years, Tianneng Power International Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Tianneng Power International rewards its CEO solely through a salary, ignoring non-salary benefits completely. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with 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 1 warning sign for Tianneng Power International that you should be aware of before investing.

Important note: Tianneng Power International 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.