Here's Why Shareholders May Want To Be Cautious With Increasing Shunfeng International Clean Energy Limited's (HKG:1165) CEO Pay Packet

Key Insights

• Shunfeng International Clean Energy will host its Annual General Meeting on 14th of June
• Salary of CN¥1.80m is part of CEO Yu Wang's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Shunfeng International Clean Energy's EPS grew by 15% and over the past three years, the total loss to shareholders 82%

Shareholders of Shunfeng International Clean Energy Limited (HKG:1165) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 14th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Shunfeng International Clean Energy

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

According to our data, Shunfeng International Clean Energy Limited has a market capitalization of HK$147m, and paid its CEO total annual compensation worth CN¥1.8m over the year to December 2023. That's just a smallish increase of 5.0% on last year. In particular, the salary of CN¥1.80m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Renewable Energy industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.9m. This suggests that Shunfeng International Clean Energy remunerates its CEO largely in line with the industry average. Furthermore, Yu Wang directly owns HK$793k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.8m	CN¥1.7m	99%
Other	CN¥16k	CN¥15k	1%
Total Compensation	CN¥1.8m	CN¥1.7m	100%

Speaking on an industry level, nearly 52% of total compensation represents salary, while the remainder of 48% is other remuneration. Shunfeng International Clean Energy is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to 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.

Shunfeng International Clean Energy Limited's Growth

Over the past three years, Shunfeng International Clean Energy Limited has seen its earnings per share (EPS) grow by 15% per year. Its revenue is down 24% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shunfeng International Clean Energy Limited Been A Good Investment?

Few Shunfeng International Clean Energy Limited shareholders would feel satisfied with the return of -82% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Yu receives almost all of their compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Shunfeng International Clean Energy (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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.