Key Insights

• Chu Kong Petroleum and Natural Gas Steel Pipe Holdings to hold its Annual General Meeting on 21st of June
• Salary of CN¥1.03m is part of CEO David Chen's total remuneration
• The overall pay is 30% below the industry average
• Over the past three years, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings' EPS fell by 33% and over the past three years, the total loss to shareholders 54%

The underwhelming performance at Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited (HKG:1938) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 21st of June. The data we gathered below shows that CEO compensation looks acceptable for now.

How Does Total Compensation For David Chen Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited has a market capitalization of HK$180m, and reported total annual CEO compensation of CN¥1.0m for the year to December 2023. That's a fairly small increase of 3.1% over the previous year. Notably, the salary of CN¥1.0m is the entirety of the CEO compensation.

In comparison with other companies in the Hong Kong Energy Services industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.5m. Accordingly, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings pays its CEO under the industry median. Moreover, David Chen also holds HK$126m worth of Chu Kong Petroleum and Natural Gas Steel Pipe Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. On a company level, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings prefers to reward its CEO through a salary, opting not to pay David Chen through non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited's Growth

Over the last three years, Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited has shrunk its earnings per share by 33% per year. It achieved revenue growth of 12% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited Been A Good Investment?

Few Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited shareholders would feel satisfied with the return of -54% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Chu Kong Petroleum and Natural Gas Steel Pipe Holdings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Chu Kong Petroleum and Natural Gas Steel Pipe Holdings we think you should know about.

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. 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