We Take A Look At Whether Add New Energy Investment Holdings Group Limited's (HKG:2623) CEO May Be Underpaid

By
Simply Wall St
Published
May 22, 2021
SEHK:2623
Source: Shutterstock

Shareholders will be pleased by the impressive results for Add New Energy Investment Holdings Group Limited (HKG:2623) recently and CEO Guohua Geng has played a key role. This would be kept in mind at the upcoming AGM on 28 May 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

Check out our latest analysis for Add New Energy Investment Holdings Group

How Does Total Compensation For Guohua Geng Compare With Other Companies In The Industry?

At the time of writing, our data shows that Add New Energy Investment Holdings Group Limited has a market capitalization of HK$1.3b, and reported total annual CEO compensation of CN¥714k for the year to December 2020. That's a notable increase of 29% on last year. We note that the salary portion, which stands at CN¥698.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$776m to HK$3.1b, the reported median CEO total compensation was CN¥1.2m. This suggests that Guohua Geng is paid below the industry median. What's more, Guohua Geng holds HK$4.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary CN¥698k CN¥537k 98%
Other CN¥16k CN¥16k 2%
Total CompensationCN¥714k CN¥553k100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Investors will find it interesting that Add New Energy Investment Holdings Group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
SEHK:2623 CEO Compensation May 23rd 2021

A Look at Add New Energy Investment Holdings Group Limited's Growth Numbers

Add New Energy Investment Holdings Group Limited has seen its earnings per share (EPS) increase by 60% a year over the past three years. It achieved revenue growth of 198% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Add New Energy Investment Holdings Group Limited Been A Good Investment?

We think that the total shareholder return of 117%, over three years, would leave most Add New Energy Investment Holdings Group Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Guohua receives almost all of their compensation through a salary. Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are concerning) in Add New Energy Investment Holdings Group we think you should know about.

Switching gears from Add New Energy Investment Holdings Group, 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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