It's Probably Less Likely That China High Speed Transmission Equipment Group Co., Ltd.'s (HKG:658) CEO Will See A Huge Pay Rise This Year

In the past three years, the share price of China High Speed Transmission Equipment Group Co., Ltd. (HKG:658) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 25 June 2021, where they can impact on future company performance by voting on resolutions, including executive compensation. 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 China High Speed Transmission Equipment Group

Comparing China High Speed Transmission Equipment Group Co., Ltd.'s CEO Compensation With the industry

Our data indicates that China High Speed Transmission Equipment Group Co., Ltd. has a market capitalization of HK$8.4b, and total annual CEO compensation was reported as CN¥2.5m for the year to December 2020. This was the same amount the CEO received in the prior year. In particular, the salary of CN¥2.40m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was CN¥2.4m. From this we gather that Jichun Hu is paid around the median for CEOs in the industry.

Component	2020	2019	Proportion (2020)
Salary	CN¥2.4m	CN¥2.4m	98%
Other	CN¥53k	CN¥53k	2%
Total Compensation	CN¥2.5m	CN¥2.5m	100%

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. China High Speed Transmission Equipment Group is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to 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 China High Speed Transmission Equipment Group Co., Ltd.'s Growth Numbers

Over the last three years, China High Speed Transmission Equipment Group Co., Ltd. has shrunk its earnings per share by 6.9% per year. In the last year, its revenue is up 58%.

The reduction in EPS, over three years, is arguably concerning. 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. 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 China High Speed Transmission Equipment Group Co., Ltd. Been A Good Investment?

With a total shareholder return of -51% over three years, China High Speed Transmission Equipment Group Co., Ltd. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Jichun 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for China High Speed Transmission Equipment Group (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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. 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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