Is Yuan Heng Gas Holdings Limited (HKG:332) Excessively Paying Its CEO?
Jianqing Wang became the CEO of Yuan Heng Gas Holdings Limited (HKG:332) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Yuan Heng Gas Holdings
How Does Jianqing Wang's Compensation Compare With Similar Sized Companies?
Our data indicates that Yuan Heng Gas Holdings Limited is worth HK$2.6b, and total annual CEO compensation was reported as CN¥1.4m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at CN¥712k. We examined companies with market caps from CN¥1.4b to CN¥5.7b, and discovered that the median CEO total compensation of that group was CN¥2.4m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Yuan Heng Gas Holdings stands. Talking in terms of the sector, salary represented approximately 85% of total compensation out of all the companies we analysed, while other remuneration made up 15% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for Yuan Heng Gas Holdings, in sharp contrast to the overall sector.
Most shareholders would consider it a positive that Jianqing Wang takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see, below, how CEO compensation at Yuan Heng Gas Holdings has changed over time.
Is Yuan Heng Gas Holdings Limited Growing?
Over the last three years Yuan Heng Gas Holdings Limited has seen earnings per share (EPS) move in a positive direction by an average of 65% per year (using a line of best fit). In the last year, its revenue is up 12%.
This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Yuan Heng Gas Holdings Limited Been A Good Investment?
Since shareholders would have lost about 45% over three years, some Yuan Heng Gas Holdings Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
It looks like Yuan Heng Gas Holdings Limited pays its CEO less than similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we would not say that Jianqing Wang is generously paid, it would be good to see an improvement in business performance before too an increase in pay. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. CEO compensation is an important area to keep your eyes on, but we've also identified 2 warning signs for Yuan Heng Gas Holdings (1 can't be ignored!) that you should be aware of before investing here.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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