China Oil And Gas Group Limited's (HKG:603) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• China Oil And Gas Group to hold its Annual General Meeting on 21st of June
• CEO Tie-liang Xu's total compensation includes salary of HK$22.6m
• The overall pay is 3,562% above the industry average
• China Oil And Gas Group's EPS grew by 7.8% over the past three years while total shareholder loss over the past three years was 50%

Shareholders of China Oil And Gas Group Limited (HKG:603) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 21st of June. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for China Oil And Gas Group

How Does Total Compensation For Tie-liang Xu Compare With Other Companies In The Industry?

Our data indicates that China Oil And Gas Group Limited has a market capitalization of HK$976m, and total annual CEO compensation was reported as HK$23m for the year to December 2023. Notably, that's a decrease of 18% over the year before. Notably, the salary which is HK$22.6m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Gas Utilities industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$621k. Accordingly, our analysis reveals that China Oil And Gas Group Limited pays Tie-liang Xu north of the industry median. What's more, Tie-liang Xu holds HK$323m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$23m	HK$28m	99%
Other	HK$138k	HK$138k	1%
Total Compensation	HK$23m	HK$28m	100%

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. China Oil And Gas Group has gone down a largely traditional route, paying Tie-liang Xu a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Oil And Gas Group Limited's Growth

China Oil And Gas Group Limited has seen its earnings per share (EPS) increase by 7.8% a year over the past three years. Its revenue is up 7.1% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has China Oil And Gas Group Limited Been A Good Investment?

With a total shareholder return of -50% over three years, China Oil And Gas Group Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Tie-liang receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for China Oil And Gas Group that investors should think about before committing capital to this stock.

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