Does China Energy Engineering Corporation Limited's (HKG:3996) CEO Pay Matter?
The CEO of China Energy Engineering Corporation Limited (HKG:3996) is Yanzhang Ding. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for China Energy Engineering
How Does Yanzhang Ding's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that China Energy Engineering Corporation Limited has a market cap of HK$29b, and is paying total annual CEO compensation of CN¥734k. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at CN¥226k. We examined companies with market caps from CN¥13b to CN¥43b, and discovered that the median CEO total compensation of that group was CN¥2.5m.
Most shareholders would consider it a positive that Yanzhang Ding 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.
The graphic below shows how CEO compensation at China Energy Engineering has changed from year to year.
Is China Energy Engineering Corporation Limited Growing?
China Energy Engineering Corporation Limited has reduced its earnings per share by an average of 4.0% a year, over the last three years (measured with a line of best fit). It saw its revenue drop -4.4% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. 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. It could be important to check this free visual depiction of what analysts expect for the future.
Has China Energy Engineering Corporation Limited Been A Good Investment?
With a three year total loss of 27%, China Energy Engineering Corporation Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
It appears that China Energy Engineering Corporation Limited remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Yanzhang Ding is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Shareholders may want to check for free if China Energy Engineering insiders are buying or selling shares.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.
