Here's Why Shareholders Should Examine Kangda International Environmental Company Limited's (HKG:6136) CEO Compensation Package More Closely

Key Insights

• Kangda International Environmental will host its Annual General Meeting on 5th of June
• Total pay for CEO Jerry Duan includes CN¥1.35m salary
• The total compensation is 176% higher than the average for the industry
• Kangda International Environmental's EPS declined by 36% over the past three years while total shareholder loss over the past three years was 68%

Kangda International Environmental Company Limited (HKG:6136) has not performed well recently and CEO Jerry Duan will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 5th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Kangda International Environmental

Comparing Kangda International Environmental Company Limited's CEO Compensation With The Industry

Our data indicates that Kangda International Environmental Company Limited has a market capitalization of HK$481m, and total annual CEO compensation was reported as CN¥1.6m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at CN¥1.35m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Water Utilities industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥567k. Hence, we can conclude that Jerry Duan is remunerated higher than the industry median. Furthermore, Jerry Duan directly owns HK$2.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.4m	CN¥1.3m	86%
Other	CN¥217k	CN¥211k	14%
Total Compensation	CN¥1.6m	CN¥1.5m	100%

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. Kangda International Environmental is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Kangda International Environmental Company Limited's Growth

Kangda International Environmental Company Limited has reduced its earnings per share by 36% a year over the last three years. Its revenue is down 23% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kangda International Environmental Company Limited Been A Good Investment?

The return of -68% over three years would not have pleased Kangda International Environmental Company Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Kangda International Environmental you should be aware of, and 2 of them are potentially serious.

Switching gears from Kangda International Environmental, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.