Here's Why Shareholders Should Examine Recon Technology, Ltd.'s (NASDAQ:RCON) CEO Compensation Package More Closely

Key Insights

• Recon Technology to hold its Annual General Meeting on 15th of May
• CEO Shenping Yin's total compensation includes salary of CN¥4.36m
• The overall pay is comparable to the industry average
• Over the past three years, Recon Technology's EPS fell by 92% and over the past three years, the total loss to shareholders 88%

Our free stock report includes 4 warning signs investors should be aware of before investing in Recon Technology. Read for free now.

The results at Recon Technology, Ltd. (NASDAQ:RCON) have been quite disappointing recently and CEO Shenping Yin bears some responsibility for this. At the upcoming AGM on 15th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Recon Technology

Comparing Recon Technology, Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Recon Technology, Ltd. has a market capitalization of US$46m, and reported total annual CEO compensation of CN¥14m for the year to June 2024. That's a notable decrease of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥4.4m.

In comparison with other companies in the American Energy Services industry with market capitalizations under US$200m, the reported median total CEO compensation was CN¥14m. This suggests that Recon Technology remunerates its CEO largely in line with the industry average. What's more, Shenping Yin holds US$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. Recon Technology pays out 31% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Recon Technology, Ltd.'s Growth Numbers

Over the last three years, Recon Technology, Ltd. has shrunk its earnings per share by 92% per year. Its revenue is down 1.7% 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Recon Technology, Ltd. Been A Good Investment?

Few Recon Technology, Ltd. shareholders would feel satisfied with the return of -88% over three years. 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Recon Technology we think you should know about.

Important note: Recon Technology 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.