Here's Why Shareholders Should Examine China Metal Resources Utilization Limited's (HKG:1636) CEO Compensation Package More Closely

Shareholders will probably not be too impressed with the underwhelming results at China Metal Resources Utilization Limited (HKG:1636) recently. At the upcoming AGM on 18 June 2021, 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for China Metal Resources Utilization

How Does Total Compensation For Jianqiu Yu Compare With Other Companies In The Industry?

At the time of writing, our data shows that China Metal Resources Utilization Limited has a market capitalization of HK$782m, and reported total annual CEO compensation of CN¥2.8m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of CN¥2.82m, 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 CN¥1.2m. Accordingly, our analysis reveals that China Metal Resources Utilization Limited pays Jianqiu Yu north of the industry median. Moreover, Jianqiu Yu also holds HK$127m worth of China Metal Resources Utilization stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CN¥2.8m	CN¥2.8m	99%
Other	CN¥16k	CN¥16k	1%
Total Compensation	CN¥2.8m	CN¥2.8m	100%

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. China Metal Resources Utilization pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

China Metal Resources Utilization Limited's Growth

Over the last three years, China Metal Resources Utilization Limited has shrunk its earnings per share by 120% per year. Its revenue is down 30% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has China Metal Resources Utilization Limited Been A Good Investment?

Few China Metal Resources Utilization Limited shareholders would feel satisfied with the return of -95% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Jianqiu 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for China Metal Resources Utilization that investors should be aware of in a dynamic business environment.

Important note: China Metal Resources Utilization 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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