U.S. Markets close in 5 hrs 53 mins

Is NewOcean Energy Holdings Limited's (HKG:342) CEO Salary Justified?

Simply Wall St

Lawrence Shum has been the CEO of NewOcean Energy Holdings Limited (HKG:342) since 2009. 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for NewOcean Energy Holdings

How Does Lawrence Shum's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that NewOcean Energy Holdings Limited has a market cap of HK$1.7b, and reported total annual CEO compensation of HK$1.1m for the year to December 2018. Notably, the salary of HK$1.0m is the vast majority of the CEO compensation. We examined companies with market caps from HK$783m to HK$3.1b, and discovered that the median CEO total compensation of that group was HK$2.3m.

Most shareholders would consider it a positive that Lawrence Shum takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at NewOcean Energy Holdings has changed over time.

SEHK:342 CEO Compensation, December 4th 2019

Is NewOcean Energy Holdings Limited Growing?

On average over the last three years, NewOcean Energy Holdings Limited has grown earnings per share (EPS) by 2.5% each year (using a line of best fit). It achieved revenue growth of 34% over the last year.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. So while I'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has NewOcean Energy Holdings Limited Been A Good Investment?

With a three year total loss of 47%, NewOcean Energy Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

NewOcean Energy Holdings Limited is currently paying its CEO below what is normal for companies of its size.

Lawrence Shum receives relatively low remuneration compared to similar sized companies. But the company isn't exactly firing on all cylinders, and returns over three years are not good. I am not concerned by the CEO compensation, but it would be good to see improved performance before pay increases. So you may want to check if insiders are buying NewOcean Energy Holdings shares with their own money (free access).

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.

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.