Key Insights

• China Oil And Gas Group will host its Annual General Meeting on 21st of June
• Total pay for CEO Tie-liang Xu includes HK$22.6m salary
• Total compensation is 3,562% above industry average
• China Oil And Gas Group's EPS grew by 7.8% over the past three years while total shareholder loss over the past three years was 50%

The underwhelming share price performance of China Oil And Gas Group Limited (HKG:603) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 21st of June. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Comparing China Oil And Gas Group Limited's CEO Compensation With The Industry

According to our data, China Oil And Gas Group Limited has a market capitalization of HK$976m, and paid its CEO total annual compensation worth HK$23m over the year to December 2023. That's a notable decrease of 18% on last year. In particular, the salary of HK$22.6m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Gas Utilities industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$621k. Accordingly, our analysis reveals that China Oil And Gas Group Limited pays Tie-liang Xu north of the industry median. Moreover, Tie-liang Xu also holds HK$323m worth of China Oil And Gas Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. Investors will find it interesting that China Oil And Gas Group pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

China Oil And Gas Group Limited's Growth

China Oil And Gas Group Limited's earnings per share (EPS) grew 7.8% per year over the last three years. In the last year, its revenue is up 7.1%.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has China Oil And Gas Group Limited Been A Good Investment?

Few China Oil And Gas Group Limited shareholders would feel satisfied with the return of -50% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Tie-liang receives almost all of their compensation through a salary. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for China Oil And Gas Group that investors should think about before committing capital to this stock.

Important note: China Oil And Gas Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com