Key Insights

• China Everbright Environment Group's Annual General Meeting to take place on 30th of May
• Total pay for CEO Zusheng Luan includes HK$1.55m salary
• Total compensation is 31% above industry average
• China Everbright Environment Group's three-year loss to shareholders was 7.5% while its EPS was down 9.7% over the past three years

The results at China Everbright Environment Group Limited (HKG:257) have been quite disappointing recently and CEO Zusheng Luan bears some responsibility for this. At the upcoming AGM on 30th of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Comparing China Everbright Environment Group Limited's CEO Compensation With The Industry

According to our data, China Everbright Environment Group Limited has a market capitalization of HK$22b, and paid its CEO total annual compensation worth HK$2.8m over the year to December 2023. That's a notable decrease of 32% on last year. We note that the salary of HK$1.55m makes up a sizeable portion of the total compensation received by the CEO.

On examining similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was HK$2.1m. Accordingly, our analysis reveals that China Everbright Environment Group Limited pays Zusheng Luan north of the industry median.

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. In China Everbright Environment Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at China Everbright Environment Group Limited's Growth Numbers

China Everbright Environment Group Limited has reduced its earnings per share by 9.7% a year over the last three years. Its revenue is down 14% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has China Everbright Environment Group Limited Been A Good Investment?

With a three year total loss of 7.5% for the shareholders, China Everbright Environment Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for China Everbright Environment Group (1 is a bit concerning!) that you should be aware of before investing here.

Switching gears from China Everbright Environment Group, 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.