Should Shareholders Worry About Beijing Enterprises Water Group Limited's (HKG:371) CEO Compensation Package?

The underwhelming performance at Beijing Enterprises Water Group Limited (HKG:371) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 20 December 2021. The data we gathered below shows that CEO compensation looks acceptable for now.

Check out our latest analysis for Beijing Enterprises Water Group

How Does Total Compensation For Min Zhou Compare With Other Companies In The Industry?

At the time of writing, our data shows that Beijing Enterprises Water Group Limited has a market capitalization of HK$29b, and reported total annual CEO compensation of HK$15m for the year to December 2020. That's a modest increase of 5.1% on the prior year. We note that the salary portion, which stands at HK$9.02m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was HK$25m. Accordingly, Beijing Enterprises Water Group pays its CEO under the industry median. Furthermore, Min Zhou directly owns HK$1.1b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$9.0m	HK$8.3m	61%
Other	HK$5.7m	HK$5.7m	39%
Total Compensation	HK$15m	HK$14m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Beijing Enterprises Water Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Beijing Enterprises Water Group Limited's Growth Numbers

Over the last three years, Beijing Enterprises Water Group Limited has shrunk its earnings per share by 2.9% per year. In the last year, its revenue is down 4.5%.

The lack of EPS growth is certainly uninspiring. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Beijing Enterprises Water Group Limited Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Beijing Enterprises Water Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Beijing Enterprises Water Group that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.