Shareholders May Be Wary Of Increasing Yuan Heng Gas Holdings Limited's (HKG:332) CEO Compensation Package

The results at Yuan Heng Gas Holdings Limited (HKG:332) have been quite disappointing recently and CEO Jianqing Wang bears some responsibility for this. At the upcoming AGM on 20 September 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Yuan Heng Gas Holdings

Comparing Yuan Heng Gas Holdings Limited's CEO Compensation With the industry

Our data indicates that Yuan Heng Gas Holdings Limited has a market capitalization of HK$2.8b, and total annual CEO compensation was reported as CN¥1.5m for the year to March 2021. That's a fairly small increase of 3.2% over the previous year. Notably, the salary which is CN¥768.0k, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was CN¥1.2m. This suggests that Yuan Heng Gas Holdings remunerates its CEO largely in line with the industry average. Moreover, Jianqing Wang also holds HK$2.4b worth of Yuan Heng Gas Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	CN¥768k	CN¥705k	50%
Other	CN¥757k	CN¥773k	50%
Total Compensation	CN¥1.5m	CN¥1.5m	100%

Speaking on an industry level, nearly 93% of total compensation represents salary, while the remainder of 7% is other remuneration. Yuan Heng Gas Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Yuan Heng Gas Holdings Limited's Growth

Over the last three years, Yuan Heng Gas Holdings Limited has shrunk its earnings per share by 75% per year. In the last year, its revenue is up 4.3%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Yuan Heng Gas Holdings Limited Been A Good Investment?

With a three year total loss of 22% for the shareholders, Yuan Heng Gas Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Yuan Heng Gas Holdings we think you should know about.

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.
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