Should Shareholders Reconsider Tonking New Energy Group Holdings Limited's (HKG:8326) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Tonking New Energy Group Holdings Limited (HKG:8326) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 18 August 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Tonking New Energy Group Holdings

Comparing Tonking New Energy Group Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Tonking New Energy Group Holdings Limited has a market capitalization of HK$171m, and reported total annual CEO compensation of HK$876k for the year to March 2021. That's a slight decrease of 4.3% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$371k.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.2m. So it looks like Tonking New Energy Group Holdings compensates Jian Nong Wu in line with the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$371k	HK$374k	42%
Other	HK$505k	HK$541k	58%
Total Compensation	HK$876k	HK$915k	100%

On an industry level, roughly 54% of total compensation represents salary and 46% is other remuneration. In Tonking New Energy Group Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Tonking New Energy Group Holdings Limited's Growth

Over the last three years, Tonking New Energy Group Holdings Limited has shrunk its earnings per share by 72% per year. In the last year, its revenue is down 33%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Tonking New Energy Group Holdings Limited Been A Good Investment?

Few Tonking New Energy Group Holdings Limited shareholders would feel satisfied with the return of -53% over three years. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to 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 3 warning signs (and 1 which is concerning) in Tonking New Energy Group Holdings we think you should know about.

Important note: Tonking New Energy Group 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.
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