We Discuss Why Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited's (HKG:1938) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• Chu Kong Petroleum and Natural Gas Steel Pipe Holdings' Annual General Meeting to take place on 21st of June
• Total pay for CEO David Chen includes CN¥1.03m salary
• Total compensation is 30% below industry average
• Chu Kong Petroleum and Natural Gas Steel Pipe Holdings' EPS declined by 33% over the past three years while total shareholder loss over the past three years was 54%

The underwhelming performance at Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited (HKG:1938) recently has probably not pleased shareholders. At the upcoming AGM on 21st of June, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for Chu Kong Petroleum and Natural Gas Steel Pipe Holdings

How Does Total Compensation For David Chen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited has a market capitalization of HK$180m, and reported total annual CEO compensation of CN¥1.0m for the year to December 2023. That's just a smallish increase of 3.1% on last year. Notably, the salary of CN¥1.0m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Hong Kong Energy Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥1.5m. Accordingly, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings pays its CEO under the industry median. Moreover, David Chen also holds HK$126m worth of Chu Kong Petroleum and Natural Gas Steel Pipe Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.0m	CN¥997k	100%
Other	-	-	-
Total Compensation	CN¥1.0m	CN¥997k	100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. On a company level, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings prefers to reward its CEO through a salary, opting not to pay David Chen through 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 Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited's Growth Numbers

Over the last three years, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited has shrunk its earnings per share by 33% per year. In the last year, its revenue is up 12%.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited Been A Good Investment?

The return of -54% over three years would not have pleased Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Chu Kong Petroleum and Natural Gas Steel Pipe Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Chu Kong Petroleum and Natural Gas Steel Pipe Holdings (1 is a bit unpleasant!) 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.

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