Increases to China Gas Holdings Limited's (HKG:384) CEO Compensation Might Cool off for now

In the past three years, shareholders of China Gas Holdings Limited (HKG:384) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 18 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for China Gas Holdings

Comparing China Gas Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that China Gas Holdings Limited has a market capitalization of HK$137b, and reported total annual CEO compensation of HK$18m for the year to March 2021. That is, the compensation was roughly the same as last year. We note that the salary of HK$9.79m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations over HK$62b , the reported median total CEO compensation was HK$4.1m. This suggests that Ming Hui Liu is paid more than the median for the industry. Furthermore, Ming Hui Liu directly owns HK$8.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	HK$9.8m	HK$9.4m	54%
Other	HK$8.4m	HK$9.3m	46%
Total Compensation	HK$18m	HK$19m	100%

On an industry level, around 51% of total compensation represents salary and 49% is other remuneration. Although there is a difference in how total compensation is set, China Gas Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

China Gas Holdings Limited's Growth

Over the past three years, China Gas Holdings Limited has seen its earnings per share (EPS) grow by 18% per year. It achieved revenue growth of 18% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Gas Holdings Limited Been A Good Investment?

Given the total shareholder loss of 5.3% over three years, many shareholders in China Gas Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for China Gas Holdings (1 is a bit concerning!) that you should be aware of before investing here.

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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