Does Silk Road Energy Services Group's (HKG:8250) CEO Salary Compare Well With The Performance Of The Company?

Youhua Chen has been the CEO of Silk Road Energy Services Group Limited (HKG:8250) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Silk Road Energy Services Group

Comparing Silk Road Energy Services Group Limited's CEO Compensation With the industry

According to our data, Silk Road Energy Services Group Limited has a market capitalization of HK$112m, and paid its CEO total annual compensation worth HK$1.2m over the year to June 2020. That's a slight decrease of 7.6% on the prior year. In particular, the salary of HK$1.20m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.4m. This suggests that Silk Road Energy Services Group remunerates its CEO largely in line with the industry average.

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. Investors will find it interesting that Silk Road Energy Services Group 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.

A Look at Silk Road Energy Services Group Limited's Growth Numbers

Silk Road Energy Services Group Limited's earnings per share (EPS) grew 23% per year over the last three years. Its revenue is down 33% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Silk Road Energy Services Group Limited Been A Good Investment?

Given the total shareholder loss of 71% over three years, many shareholders in Silk Road Energy Services Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Silk Road Energy Services Group pays its CEO a majority of compensation through a salary. As we noted earlier, Silk Road Energy Services Group pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Youhua is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Silk Road Energy Services Group that investors should be aware of in a dynamic business environment.

Important note: Silk Road Energy Services Group 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. 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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