Shareholders May Be A Bit More Conservative With SPT Energy Group Inc.'s (HKG:1251) CEO Compensation For Now

Key Insights

• SPT Energy Group will host its Annual General Meeting on 26th of June
• Salary of CN¥1.30m is part of CEO Ethan Wu's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, SPT Energy Group's EPS grew by 124% and over the past three years, the total loss to shareholders 20%

Shareholders of SPT Energy Group Inc. (HKG:1251) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 26th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for SPT Energy Group

Comparing SPT Energy Group Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that SPT Energy Group Inc. has a market capitalization of HK$475m, and reported total annual CEO compensation of CN¥1.5m for the year to December 2023. We note that's a decrease of 47% compared to last year. In particular, the salary of CN¥1.30m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Energy Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.8m. This suggests that SPT Energy Group remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.3m	CN¥2.6m	88%
Other	CN¥178k	CN¥174k	12%
Total Compensation	CN¥1.5m	CN¥2.8m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. SPT Energy Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

SPT Energy Group Inc.'s Growth

SPT Energy Group Inc.'s earnings per share (EPS) grew 124% per year over the last three years. In the last year, its revenue is up 10%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 SPT Energy Group Inc. Been A Good Investment?

Since shareholders would have lost about 20% over three years, some SPT Energy Group Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 did our research and spotted 2 warning signs for SPT Energy Group that investors should look into moving forward.

Important note: SPT Energy Group 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.

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