We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Dongyue Group Limited's (HKG:189) CEO For Now

Key Insights

• Dongyue Group will host its Annual General Meeting on 5th of June
• Salary of CN¥6.00m is part of CEO Jianhong Zhang's total remuneration
• Total compensation is 190% above industry average
• Dongyue Group's EPS declined by 22% over the past three years while total shareholder return over the past three years was 8.1%

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The share price of Dongyue Group Limited (HKG:189) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. The upcoming AGM on 5th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Dongyue Group

How Does Total Compensation For Jianhong Zhang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Dongyue Group Limited has a market capitalization of HK$16b, and reported total annual CEO compensation of CN¥17m for the year to December 2024. That's a notable decrease of 24% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥6.0m.

On examining similar-sized companies in the Hong Kong Chemicals industry with market capitalizations between HK$7.8b and HK$25b, we discovered that the median CEO total compensation of that group was CN¥5.9m. This suggests that Jianhong Zhang is paid more than the median for the industry. What's more, Jianhong Zhang holds HK$66m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. In Dongyue Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Dongyue Group Limited's Growth

Over the last three years, Dongyue Group Limited has shrunk its earnings per share by 22% per year. In the last year, its revenue is down 2.2%.

Overall this is not a very positive result for shareholders. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Dongyue Group Limited Been A Good Investment?

Dongyue Group Limited has not done too badly by shareholders, with a total return of 8.1%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

Shareholders may want to check for free if Dongyue Group insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.