We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Canvest Environmental Protection Group Company Limited's (HKG:1381) CEO For Now

Key Insights

• Canvest Environmental Protection Group's Annual General Meeting to take place on 21st of June
• CEO Guozhen Yuan's total compensation includes salary of HK$1.65m
• The overall pay is 204% above the industry average
• Over the past three years, Canvest Environmental Protection Group's EPS fell by 1.8% and over the past three years, the total shareholder return was 0.7%

The anaemic share price growth at Canvest Environmental Protection Group Company Limited (HKG:1381) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. The upcoming AGM on 21st of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Canvest Environmental Protection Group

How Does Total Compensation For Guozhen Yuan Compare With Other Companies In The Industry?

Our data indicates that Canvest Environmental Protection Group Company Limited has a market capitalization of HK$9.7b, and total annual CEO compensation was reported as HK$2.5m for the year to December 2023. That's a slight decrease of 4.4% on the prior year. Notably, the salary which is HK$1.65m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Renewable Energy industry with market capitalizations ranging from HK$7.8b to HK$25b, the reported median CEO total compensation was HK$830k. Hence, we can conclude that Guozhen Yuan is remunerated higher than the industry median. Furthermore, Guozhen Yuan directly owns HK$1.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$1.6m	HK$1.7m	65%
Other	HK$871k	HK$937k	35%
Total Compensation	HK$2.5m	HK$2.6m	100%

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. It's interesting to note that Canvest Environmental Protection Group pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Canvest Environmental Protection Group Company Limited's Growth

Over the last three years, Canvest Environmental Protection Group Company Limited has shrunk its earnings per share by 1.8% per year. In the last year, its revenue is down 40%.

The lack of EPS growth is certainly uninspiring. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Canvest Environmental Protection Group Company Limited Been A Good Investment?

With a total shareholder return of 0.7% over three years, Canvest Environmental Protection Group Company Limited has done okay by shareholders, but there's always room for improvement. 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...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Canvest Environmental Protection Group that investors should look into moving forward.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com