Here's Why Shareholders May Consider Paying Hongcheng Environmental Technology Company Limited's (HKG:2265) CEO A Little More

Key Insights

• Hongcheng Environmental Technology to hold its Annual General Meeting on 26th of June
• Salary of CN¥376.0k is part of CEO Yirong Zhan's total remuneration
• The total compensation is 65% less than the average for the industry
• Hongcheng Environmental Technology's EPS declined by 18% over the past three years while total shareholder return over the past three years was 40%

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

The decent performance at Hongcheng Environmental Technology Company Limited (HKG:2265) recently will please most shareholders as they go into the AGM coming up on 26th of June. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

View our latest analysis for Hongcheng Environmental Technology

Comparing Hongcheng Environmental Technology Company Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Hongcheng Environmental Technology Company Limited has a market capitalization of HK$1.1b, and reported total annual CEO compensation of CN¥464k for the year to December 2024. Notably, that's an increase of 17% over the year before. Notably, the salary which is CN¥376.0k, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Commercial Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.3m. Accordingly, Hongcheng Environmental Technology pays its CEO under the industry median. Furthermore, Yirong Zhan directly owns HK$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

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. There isn't a significant difference between Hongcheng Environmental Technology and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Hongcheng Environmental Technology Company Limited's Growth

Over the last three years, Hongcheng Environmental Technology Company Limited has shrunk its earnings per share by 18% per year. It achieved revenue growth of 117% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is 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 Hongcheng Environmental Technology Company Limited Been A Good Investment?

Boasting a total shareholder return of 40% over three years, Hongcheng Environmental Technology Company Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Hongcheng Environmental Technology that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.