Yu Bian has been the CEO of Zhejiang Tengy Environmental Technology Co., Ltd (HKG:1527) since 2017. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Yu Bian's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Zhejiang Tengy Environmental Technology Co., Ltd has a market cap of HK$203m, and reported total annual CEO compensation of CN¥542k for the year to December 2019. That's less than last year. Notably, the salary of CN¥515k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO total compensation was CN¥1.6m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 86% of total compensation out of all the companies we analysed, while other remuneration made up 14% of the pie. Investors will find it interesting that Zhejiang Tengy Environmental Technology pays the bulk of its rewards through a traditional salary, instead of non-salary benefits.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at Zhejiang Tengy Environmental Technology, below.
Is Zhejiang Tengy Environmental Technology Co., Ltd Growing?
Zhejiang Tengy Environmental Technology Co., Ltd has reduced its earnings per share by an average of 43% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 15%.
Sadly for shareholders, earnings per share are actually down, 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. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Zhejiang Tengy Environmental Technology Co., Ltd Been A Good Investment?
Given the total loss of 79% over three years, many shareholders in Zhejiang Tengy Environmental Technology Co., Ltd are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Zhejiang Tengy Environmental Technology Co., Ltd is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Yu Bian is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Taking a breather from CEO compensation, we've spotted 3 warning signs for Zhejiang Tengy Environmental Technology (of which 1 makes us a bit uncomfortable!) you should know about in order to have a holistic understanding of the stock.
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.
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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. 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. Thank you for reading.