Here's Why It's Unlikely That Tibet Water Resources Ltd.'s (HKG:1115) CEO Will See A Pay Rise This Year

Tibet Water Resources Ltd. (HKG:1115) has not performed well recently and CEO Dong Wang will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30 June 2021. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Tibet Water Resources

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

According to our data, Tibet Water Resources Ltd. has a market capitalization of HK$2.1b, and paid its CEO total annual compensation worth CN¥1.5m over the year to December 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is CN¥1.33m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$776m to HK$3.1b, we found that the median CEO total compensation was CN¥1.4m. So it looks like Tibet Water Resources compensates Dong Wang in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	CN¥1.3m	CN¥1.3m	89%
Other	CN¥165k	CN¥185k	11%
Total Compensation	CN¥1.5m	CN¥1.5m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. There isn't a significant difference between Tibet Water Resources and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Tibet Water Resources Ltd.'s Growth Numbers

Tibet Water Resources Ltd. has reduced its earnings per share by 62% a year over the last three years. It saw its revenue drop 32% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Tibet Water Resources Ltd. Been A Good Investment?

With a total shareholder return of -71% over three years, Tibet Water Resources Ltd. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Tibet Water Resources (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from Tibet Water Resources, 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. 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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