Key Insights

• ZONQING Environmental will host its Annual General Meeting on 14th of June
• CEO Haitao Liu's total compensation includes salary of CN¥599.0k
• Total compensation is similar to the industry average
• Over the past three years, ZONQING Environmental's EPS grew by 16% and over the past three years, the total shareholder return was 1,229%

We have been pretty impressed with the performance at ZONQING Environmental Limited (HKG:1855) recently and CEO Haitao Liu deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 14th of June. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Comparing ZONQING Environmental Limited's CEO Compensation With The Industry

At the time of writing, our data shows that ZONQING Environmental Limited has a market capitalization of HK$7.8b, and reported total annual CEO compensation of CN¥728k for the year to December 2023. We note that's a decrease of 22% compared to last year. In particular, the salary of CN¥599.0k, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations between HK$3.1b and HK$12b, we discovered that the median CEO total compensation of that group was CN¥976k. So it looks like ZONQING Environmental compensates Haitao Liu in line with the median for the industry.

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. There isn't a significant difference between ZONQING Environmental and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ZONQING Environmental Limited's Growth

Over the past three years, ZONQING Environmental Limited has seen its earnings per share (EPS) grow by 16% per year. Its revenue is up 111% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 ZONQING Environmental Limited Been A Good Investment?

Most shareholders would probably be pleased with ZONQING Environmental Limited for providing a total return of 1,229% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for ZONQING Environmental (1 is concerning!) that you should be aware of before investing here.

Switching gears from ZONQING Environmental, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.