Here's What We Learned About The CEO Pay At China Renewable Energy Investment Limited (HKG:987)

This article will reflect on the compensation paid to Eric Oei who has served as CEO of China Renewable Energy Investment Limited (HKG:987) since 2008. This analysis will also assess whether China Renewable Energy Investment pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for China Renewable Energy Investment

How Does Total Compensation For Eric Oei Compare With Other Companies In The Industry?

According to our data, China Renewable Energy Investment Limited has a market capitalization of HK$414m, and paid its CEO total annual compensation worth HK$1.4m over the year to December 2019. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$1.16m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.6m. So it looks like China Renewable Energy Investment compensates Eric Oei in line with the median for the industry. What's more, Eric Oei holds HK$82m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. It's interesting to note that China Renewable Energy Investment pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at China Renewable Energy Investment Limited's Growth Numbers

China Renewable Energy Investment Limited has reduced its earnings per share by 1.3% a year over the last three years. It achieved revenue growth of 13% over the last year.

A lack of EPS improvement is not good to see. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 China Renewable Energy Investment Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, China Renewable Energy Investment Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, China Renewable Energy Investment Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

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 3 warning signs for China Renewable Energy Investment you should be aware of, and 1 of them is concerning.

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. 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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