We Think Shareholders May Want To Consider A Review Of China Ocean Group Development Limited's (HKG:8047) CEO Compensation Package

China Ocean Group Development Limited (HKG:8047) has not performed well recently and CEO Rongsheng Liu will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28 September 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.

View our latest analysis for China Ocean Group Development

Comparing China Ocean Group Development Limited's CEO Compensation With the industry

Our data indicates that China Ocean Group Development Limited has a market capitalization of HK$364m, and total annual CEO compensation was reported as HK$1.5m for the year to March 2021. That's a notable increase of 22% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$251k.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.5m. So it looks like China Ocean Group Development compensates Rongsheng Liu in line with the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$251k	-	17%
Other	HK$1.2m		83%
Total Compensation	HK$1.5m	HK$1.2m	100%

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. It's interesting to note that China Ocean Group Development allocates a smaller portion of compensation to salary 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.

A Look at China Ocean Group Development Limited's Growth Numbers

Over the last three years, China Ocean Group Development Limited has shrunk its earnings per share by 118% per year. Its revenue is down 41% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. 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 China Ocean Group Development Limited Been A Good Investment?

Few China Ocean Group Development Limited shareholders would feel satisfied with the return of -85% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

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 4 warning signs (and 1 which is significant) in China Ocean Group Development we think you should know about.

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.
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