Shareholders Will Probably Hold Off On Increasing Yuan Heng Gas Holdings Limited's (HKG:332) CEO Compensation For The Time Being

As many shareholders of Yuan Heng Gas Holdings Limited (HKG:332) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 26 September 2022. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Yuan Heng Gas Holdings

How Does Total Compensation For Jianqing Wang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Yuan Heng Gas Holdings Limited has a market capitalization of HK$2.9b, and reported total annual CEO compensation of CN¥1.5m for the year to March 2022. This means that the compensation hasn't changed much from last year. In particular, the salary of CN¥770.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$1.6b to HK$6.3b, we found that the median CEO total compensation was CN¥1.1m. Hence, we can conclude that Jianqing Wang is remunerated higher than the industry median. Moreover, Jianqing Wang also holds HK$1.9b 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	2022	2021	Proportion (2022)
Salary	CN¥770k	CN¥768k	51%
Other	CN¥739k	CN¥757k	49%
Total Compensation	CN¥1.5m	CN¥1.5m	100%

On an industry level, roughly 88% of total compensation represents salary and 12% is other remuneration. In Yuan Heng Gas Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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.

Yuan Heng Gas Holdings Limited's Growth

Yuan Heng Gas Holdings Limited's earnings per share (EPS) grew 31% per year over the last three years. It achieved revenue growth of 34% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Yuan Heng Gas Holdings Limited Been A Good Investment?

Given the total shareholder loss of 10.0% over three years, many shareholders in Yuan Heng Gas Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Yuan Heng Gas Holdings that you should be aware of before investing.

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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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.