We Think Some Shareholders May Hesitate To Increase Hans Energy Company Limited's (HKG:554) CEO Compensation

Key Insights

• Hans Energy will host its Annual General Meeting on 25th of April
• Total pay for CEO Dong Yang includes HK$3.30m salary
• The overall pay is 126% above the industry average
• Hans Energy's EPS grew by 60% over the past three years while total shareholder loss over the past three years was 49%

Shareholders of Hans Energy Company Limited (HKG:554) will have been dismayed by the negative share price return over the last 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 25th of April. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Hans Energy

How Does Total Compensation For Dong Yang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hans Energy Company Limited has a market capitalization of HK$745m, and reported total annual CEO compensation of HK$3.4m for the year to December 2023. We note that's an increase of 8.0% above last year. Notably, the salary which is HK$3.30m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Oil and Gas industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.5m. Accordingly, our analysis reveals that Hans Energy Company Limited pays Dong Yang north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$3.3m	HK$3.1m	98%
Other	HK$60k	HK$60k	2%
Total Compensation	HK$3.4m	HK$3.1m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Hans Energy is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Hans Energy Company Limited's Growth Numbers

Hans Energy Company Limited's earnings per share (EPS) grew 60% per year over the last three years. In the last year, its revenue is up 37%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Hans Energy Company Limited Been A Good Investment?

The return of -49% over three years would not have pleased Hans Energy Company Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Hans Energy pays its CEO a majority of compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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 be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 1 warning sign for Hans Energy that investors should look into moving forward.

Important note: Hans Energy 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.