We Think Shareholders May Want To Consider A Review Of Tibet Water Resources Ltd.'s (HKG:1115) CEO Compensation Package

Key Insights

• Tibet Water Resources will host its Annual General Meeting on 27th of June
• Salary of CN¥1.51m is part of CEO Dong Wang's total remuneration
• The total compensation is 212% higher than the average for the industry
• Tibet Water Resources' EPS declined by 115% over the past three years while total shareholder loss over the past three years was 63%

Tibet Water Resources Ltd. (HKG:1115) has not performed well recently and CEO Dong Wang will probably need to up their game. At the upcoming AGM on 27th of June, shareholders can hear from the board including their plans for turning around performance. 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.

See our latest analysis for Tibet Water Resources

Comparing Tibet Water Resources Ltd.'s CEO Compensation With The Industry

Our data indicates that Tibet Water Resources Ltd. has a market capitalization of HK$1.4b, and total annual CEO compensation was reported as CN¥1.5m for the year to December 2023. We note that's an increase of 17% above last year. In particular, the salary of CN¥1.51m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Beverage industry with market capitalizations ranging between HK$780m and HK$3.1b had a median total CEO compensation of CN¥491k. Hence, we can conclude that Dong Wang is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.5m	CN¥1.3m	99%
Other	CN¥16k	CN¥15k	1%
Total Compensation	CN¥1.5m	CN¥1.3m	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Tibet Water Resources pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Tibet Water Resources Ltd.'s Growth

Over the last three years, Tibet Water Resources Ltd. has shrunk its earnings per share by 115% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tibet Water Resources Ltd. Been A Good Investment?

The return of -63% over three years would not have pleased Tibet Water Resources Ltd. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Dong receives almost all of their compensation through a salary. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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. We did our research and identified 4 warning signs (and 1 which is a bit concerning) in Tibet Water Resources we think you should know about.

Important note: Tibet Water Resources 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com