Increases to CEO Compensation Might Be Put On Hold For Now at Mongolia Energy Corporation Limited (HKG:276)

Simply Wall St
August 18, 2021
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In the past three years, the share price of Mongolia Energy Corporation Limited (HKG:276) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 25 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Mongolia Energy

How Does Total Compensation For Yvette Ong Compare With Other Companies In The Industry?

Our data indicates that Mongolia Energy Corporation Limited has a market capitalization of HK$143m, and total annual CEO compensation was reported as HK$7.4m for the year to March 2021. That's a notable decrease of 21% on last year. In particular, the salary of HK$4.52m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$916k. This suggests that Yvette Ong is paid more than the median for the industry.

Component20212020Proportion (2021)
Salary HK$4.5m HK$4.5m 61%
Other HK$2.9m HK$5.0m 39%
Total CompensationHK$7.4m HK$9.5m100%

On an industry level, around 93% of total compensation represents salary and 7% is other remuneration. Mongolia Energy 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.

SEHK:276 CEO Compensation August 18th 2021

A Look at Mongolia Energy Corporation Limited's Growth Numbers

Mongolia Energy Corporation Limited has seen its earnings per share (EPS) increase by 67% a year over the past three years. Its revenue is down 24% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Mongolia Energy Corporation Limited Been A Good Investment?

Few Mongolia Energy Corporation Limited shareholders would feel satisfied with the return of -40% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

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 fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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 an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Mongolia Energy you should be aware of, and 1 of them can't be ignored.

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.

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