Most Shareholders Will Probably Agree With Beijing Enterprises Water Group Limited's (HKG:371) CEO Compensation

Key Insights

• Beijing Enterprises Water Group will host its Annual General Meeting on 3rd of June
• CEO Min Zhou's total compensation includes salary of CN¥5.30m
• The overall pay is 34% below the industry average
• Beijing Enterprises Water Group's total shareholder return over the past three years was 25% while its EPS was down 23% over the past three years

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Performance at Beijing Enterprises Water Group Limited (HKG:371) has been rather uninspiring recently and shareholders may be wondering how CEO Min Zhou plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 3rd of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for Beijing Enterprises Water Group

Comparing Beijing Enterprises Water Group Limited's CEO Compensation With The Industry

Our data indicates that Beijing Enterprises Water Group Limited has a market capitalization of HK$26b, and total annual CEO compensation was reported as CN¥5.5m for the year to December 2024. That's a notable decrease of 46% on last year. We note that the salary portion, which stands at CN¥5.30m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Hong Kong Water Utilities industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was CN¥8.4m. That is to say, Min Zhou is paid under the industry median. Moreover, Min Zhou also holds HK$972m worth of Beijing Enterprises Water Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	CN¥5.3m	CN¥10m	96%
Other	CN¥243k	CN¥284k	4%
Total Compensation	CN¥5.5m	CN¥10m	100%

On an industry level, roughly 93% of total compensation represents salary and 7% is other remuneration. Beijing Enterprises Water Group has gone down a largely traditional route, paying Min Zhou a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Beijing Enterprises Water Group Limited's Growth

Over the last three years, Beijing Enterprises Water Group Limited has shrunk its earnings per share by 23% per year. In the last year, its revenue is down 1.0%.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Beijing Enterprises Water Group Limited Been A Good Investment?

With a total shareholder return of 25% over three years, Beijing Enterprises Water Group Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Min receives almost all of their compensation through a salary. While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

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 2 warning signs for Beijing Enterprises Water Group that investors should look into moving forward.

Important note: Beijing Enterprises Water Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.