Key Insights

• Hans Energy to hold its Annual General Meeting on 25th of April
• Salary of HK$3.30m is part of CEO Dong Yang's total remuneration
• Total compensation is 126% above industry average
• Hans Energy's three-year loss to shareholders was 49% while its EPS grew by 60% over the past three years

In the past three years, the share price of Hans Energy Company Limited (HKG:554) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of April could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

How Does Total Compensation For Dong Yang Compare With Other Companies In The Industry?

According to our data, Hans Energy Company Limited has a market capitalization of HK$745m, and paid its CEO total annual compensation worth HK$3.4m over the year to December 2023. Notably, that's an increase of 8.0% over the year before. In particular, the salary of HK$3.30m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Oil and Gas industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.5m. Accordingly, our analysis reveals that Hans Energy Company Limited pays Dong Yang north of the industry median.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Investors will find it interesting that Hans Energy 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.

A Look at Hans Energy Company Limited's Growth Numbers

Over the past three years, Hans Energy Company Limited has seen its earnings per share (EPS) grow by 60% per year. It achieved revenue growth of 37% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Hans Energy Company Limited Been A Good Investment?

The return of -49% over three years would not have pleased Hans Energy Company Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Hans Energy pays its CEO a majority of compensation through a salary. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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. We did our research and spotted 1 warning sign for Hans Energy that investors should look into moving forward.

Switching gears from Hans Energy, 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.