Most Shareholders Will Probably Find That The Compensation For Beijing Enterprises Holdings Limited's (HKG:392) CEO Is Reasonable

Key Insights

• Beijing Enterprises Holdings' Annual General Meeting to take place on 5th of June
• Total pay for CEO Bin Xiong includes CN¥1.89m salary
• Total compensation is 50% below industry average
• Beijing Enterprises Holdings' total shareholder return over the past three years was 44% while its EPS was down 14% over the past three years

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Shareholders may be wondering what CEO Bin Xiong plans to do to improve the less than great performance at Beijing Enterprises Holdings Limited (HKG:392) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 5th 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.

View our latest analysis for Beijing Enterprises Holdings

Comparing Beijing Enterprises Holdings Limited's CEO Compensation With The Industry

According to our data, Beijing Enterprises Holdings Limited has a market capitalization of HK$42b, and paid its CEO total annual compensation worth CN¥1.9m over the year to December 2024. That's just a smallish increase of 3.6% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CN¥1.9m.

On comparing similar companies from the Hong Kong Gas Utilities industry with market caps ranging from HK$31b to HK$94b, we found that the median CEO total compensation was CN¥3.8m. This suggests that Bin Xiong is paid below the industry median. Furthermore, Bin Xiong directly owns HK$1.3m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. On a company level, Beijing Enterprises Holdings prefers to reward its CEO through a salary, opting not to pay Bin Xiong through non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Beijing Enterprises Holdings Limited's Growth Numbers

Over the last three years, Beijing Enterprises Holdings Limited has shrunk its earnings per share by 14% per year. In the last year, its revenue is up 2.1%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Beijing Enterprises Holdings Limited Been A Good Investment?

We think that the total shareholder return of 44%, over three years, would leave most Beijing Enterprises Holdings Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Beijing Enterprises Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Beijing Enterprises Holdings we think you should know about.

Important note: Beijing Enterprises Holdings 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.