It Looks Like Zhonghua Gas Holdings Limited's (HKG:8246) CEO May Expect Their Salary To Be Put Under The Microscope

The results at Zhonghua Gas Holdings Limited (HKG:8246) have been quite disappointing recently and CEO Hubert Chan 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 23 June 2021. 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 Zhonghua Gas Holdings

Comparing Zhonghua Gas Holdings Limited's CEO Compensation With the industry

Our data indicates that Zhonghua Gas Holdings Limited has a market capitalization of HK$869m, and total annual CEO compensation was reported as CN¥1.4m for the year to December 2020. Notably, that's a decrease of 27% over the year before. Notably, the salary which is CN¥926.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.5m. This suggests that Zhonghua Gas Holdings remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	CN¥926k	CN¥917k	68%
Other	CN¥439k	CN¥944k	32%
Total Compensation	CN¥1.4m	CN¥1.9m	100%

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9% of the pie. In Zhonghua Gas Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Zhonghua Gas Holdings Limited's Growth Numbers

Over the last three years, Zhonghua Gas Holdings Limited has shrunk its earnings per share by 93% per year. In the last year, its revenue changed by just 0.2%.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Zhonghua Gas Holdings Limited Been A Good Investment?

With a total shareholder return of -39% over three years, Zhonghua Gas 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...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Zhonghua Gas Holdings that investors should be aware of in a dynamic business environment.

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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