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Is China Geothermal Industry Development Group Limited's (HKG:8128) CEO Being Overpaid?

Simply Wall St

In 2016 Manquan Wang was appointed CEO of China Geothermal Industry Development Group Limited (HKG:8128). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for China Geothermal Industry Development Group

How Does Manquan Wang's Compensation Compare With Similar Sized Companies?

According to our data, China Geothermal Industry Development Group Limited has a market capitalization of HK$240m, and paid its CEO total annual compensation worth HK$2.3m over the year to December 2018. Notably, the salary of HK$2.2m is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.8m.

So Manquan Wang receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at China Geothermal Industry Development Group has changed from year to year.

SEHK:8128 CEO Compensation, January 16th 2020

Is China Geothermal Industry Development Group Limited Growing?

Over the last three years China Geothermal Industry Development Group Limited has shrunk its earnings per share by an average of 98% per year (measured with a line of best fit). It saw its revenue drop 65% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Geothermal Industry Development Group Limited Been A Good Investment?

Given the total loss of 73% over three years, many shareholders in China Geothermal Industry Development Group Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Manquan Wang is paid around what is normal the leaders of comparable size companies.

Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don't think the CEO is underpaid! So you may want to check if insiders are buying China Geothermal Industry Development Group shares with their own money (free access).

If you want to buy a stock that is better than China Geothermal Industry Development Group, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.