Here's Why It's Unlikely That China Everbright Environment Group Limited's (HKG:257) CEO Will See A Pay Rise This Year

Key Insights

• China Everbright Environment Group will host its Annual General Meeting on 30th of May
• Total pay for CEO Zusheng Luan includes HK$1.55m salary
• The overall pay is 31% above the industry average
• China Everbright Environment Group's three-year loss to shareholders was 7.5% while its EPS was down 9.7% over the past three years

China Everbright Environment Group Limited (HKG:257) has not performed well recently and CEO Zusheng Luan will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30th of May. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for China Everbright Environment Group

Comparing China Everbright Environment Group Limited's CEO Compensation With The Industry

According to our data, China Everbright Environment Group Limited has a market capitalization of HK$22b, and paid its CEO total annual compensation worth HK$2.8m over the year to December 2023. We note that's a decrease of 32% compared to last year. Notably, the salary which is HK$1.55m, represents a considerable chunk of the total compensation being paid.

On examining similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was HK$2.1m. Hence, we can conclude that Zusheng Luan is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$1.5m	HK$2.5m	56%
Other	HK$1.2m	HK$1.6m	44%
Total Compensation	HK$2.8m	HK$4.1m	100%

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. China Everbright Environment Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Everbright Environment Group Limited's Growth

China Everbright Environment Group Limited has reduced its earnings per share by 9.7% a year over the last three years. Its revenue is down 14% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has China Everbright Environment Group Limited Been A Good Investment?

Since shareholders would have lost about 7.5% over three years, some China Everbright Environment Group Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for China Everbright Environment Group (1 can't be ignored!) that you should be aware of before investing here.

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. 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.