We Discuss Why CHK Oil Limited's (HKG:632) CEO Compensation May Be Closely Reviewed

Key Insights

• CHK Oil will host its Annual General Meeting on 7th of June
• CEO Jiyuan Yu's total compensation includes salary of HK$1.82m
• Total compensation is similar to the industry average
• Over the past three years, CHK Oil's EPS fell by 63% and over the past three years, the total loss to shareholders 69%

Shareholders will probably not be too impressed with the underwhelming results at CHK Oil Limited (HKG:632) recently. At the upcoming AGM on 7th of June, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for CHK Oil

Comparing CHK Oil Limited's CEO Compensation With The Industry

According to our data, CHK Oil Limited has a market capitalization of HK$77m, and paid its CEO total annual compensation worth HK$1.8m over the year to December 2023. We note that's an increase of 67% above last year. We note that the salary portion, which stands at HK$1.82m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Oil and Gas industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.5m. So it looks like CHK Oil compensates Jiyuan Yu in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.8m	HK$1.1m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.8m	HK$1.1m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. Investors will find it interesting that CHK Oil pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

CHK Oil Limited's Growth

Over the last three years, CHK Oil Limited has shrunk its earnings per share by 63% per year. It saw its revenue drop 55% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CHK Oil Limited Been A Good Investment?

With a total shareholder return of -69% over three years, CHK Oil Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

CHK Oil pays its CEO a majority of compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 CHK Oil you should be aware of, and 2 of them are a bit concerning.

Switching gears from CHK Oil, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.