Chaowei Power Holdings Limited's (HKG:951) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• Chaowei Power Holdings will host its Annual General Meeting on 6th of June
• CEO Mingming Zhou's total compensation includes salary of CN¥1.23m
• Total compensation is similar to the industry average
• Over the past three years, Chaowei Power Holdings' EPS fell by 22% and over the past three years, the total loss to shareholders 39%

Shareholders of Chaowei Power Holdings Limited (HKG:951) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 6th of June and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for Chaowei Power Holdings

Comparing Chaowei Power Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Chaowei Power Holdings Limited has a market capitalization of HK$1.6b, and reported total annual CEO compensation of CN¥1.2m for the year to December 2023. There was no change in the compensation compared to last year. In particular, the salary of CN¥1.23m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Auto Components industry with market caps ranging from HK$782m to HK$3.1b, we found that the median CEO total compensation was CN¥997k. This suggests that Chaowei Power Holdings remunerates its CEO largely in line with the industry average. Moreover, Mingming Zhou also holds HK$433m worth of Chaowei Power Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.2m	CN¥1.2m	99%
Other	CN¥14k	CN¥14k	1%
Total Compensation	CN¥1.2m	CN¥1.2m	100%

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. Chaowei Power Holdings has gone down a largely traditional route, paying Mingming Zhou a high salary, giving it preference over non-salary benefits. 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 Chaowei Power Holdings Limited's Growth Numbers

Chaowei Power Holdings Limited has reduced its earnings per share by 22% a year over the last three years. It achieved revenue growth of 26% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Chaowei Power Holdings Limited Been A Good Investment?

With a total shareholder return of -39% over three years, Chaowei Power Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Mingming receives almost all of their compensation through a salary. The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Chaowei Power Holdings (2 are a bit unpleasant!) that you should be aware of before investing here.

Important note: Chaowei Power Holdings 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.