A look into Lububei Chemical's 2025 performance: Parent net profit drops over 80%, yet the chairman and top executives lead the way in salary increases?

Ask AI · Executive compensation rises against the trend—how does it align with regulatory requirements?

Economic Daily News reporter: Peng Fei Economic Daily News editor: Xu Shaohang

Lubei Chemical (SH600727, share price 7.65 yuan, market cap 4.04B yuan), a long-established chemical listed company controlled by Shandong’s local state-owned assets, released its 2025 annual report on the evening of March 30.

Data show that over the past year, the company suffered a severe slump in performance: full-year attributable net profit fell 85.34% year on year to 38.27 million yuan, and non-recurring profit (after adjusting) dropped by more than 90%. However, against the bleak backdrop of pressure across its core businesses and profitability edging toward the break-even line, some company executives still saw their compensation increase by 100k yuan to as much as 300k yuan.

A person familiar with the capital markets said that this abnormal situation—where performance and compensation are seriously out of sync—runs counter to the guidance emphasized by regulators: “the compensation of directors and senior executives should match the company’s operating performance and the individuals’ performance.”

A reporter from The Economic Daily News noted that as multiple executives’ pay rose, the company’s board secretary, who carries the responsibility for information disclosure, received only about 270k yuan as annual compensation in 2025, placing her at the bottom among the company’s senior management team. In response, the company’s board secretary said that her compensation “falls under special circumstances and there is nothing much to say.”

Non-recurring net profit fell more than 90%, and core businesses faced pressure across the board

The latest 2025 results delivered by Lubei Chemical show that the company’s profitability is facing substantial downside pressure.

According to the 2025 financial report, during the reporting period, Lubei Chemical achieved operating revenue of 100k yuan, down 11.43% year on year; total profit was 152 million yuan, down 64.07% year on year; and attributable net profit was 38.2712 million yuan, a year-on-year drop of as much as 85.34%. In addition, the “net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses,” which reflects the company’s true profit-generating capability, was only 26.4763 million yuan, down 90.13% year on year from 2024.

The sharp contraction in performance can be directly attributed to two core operating businesses—titanium dioxide and methane chlorides—each facing pressure across the board.

The annual report shows that titanium dioxide is the company’s largest pillar business, accounting for 65.06% of operating business revenue. However, in 2025 its sales revenue decreased 16.65% year on year; for the second-largest business, methane chlorides, sales revenue fell even more sharply by 30.79% year on year.

In the annual report, in the section “Explanation of changes in operating revenue,” the company said: “Mainly due to the reduction in revenue from this period’s titanium dioxide and methane chloride products”; and in the “Explanation of changes in operating costs,” it also pointed out: “Mainly due to the reduction in sales volume of this period’s titanium dioxide and methane chloride products.”

In terms of specific production and sales volumes, Lubei Chemical’s 2024 sales volume for titanium dioxide was 260.7k tons, down 5.67% year on year; and sales volume for methane chlorides was 392.2k tons, down sharply by 18.96% year on year.

Behind this lies an adjustment in the overall macro industry landscape. Statistics released by the Titanium Dioxide Industry Technology Innovation Strategic Alliance show that from 2019 to 2025, China’s total titanium dioxide output grew from 300k tons to 270k tons, with a CAGR of 6.8%. Among this, in 2025 the industry’s total output fell slightly by 1.0% year on year—marking the first time in more than two decades that annual output recorded negative growth. In addition, the number of operating enterprises with full-process production capability in the industry shrank to 36, down 9 from 2024; the industry’s “elimination and clearance” process accelerated, and market concentration continued to increase.

Meanwhile, in 2025 the methane chlorides industry showed a pattern of “worsening oversupply, prices bottoming out deeply, and passive growth in exports.” Supply-demand contradictions offset the positives from raw material methanol and liquid chlorine price declines, compressing companies’ profit margins. In this environment, Lubei Chemical’s core business faced pressure, leading to a sharp drop in net profit.

Profit plunges, but management compensation goes up instead? Some executives get pay raises of over 300k yuan

With attributable net profit dropping by nearly 80% and core businesses looking bleak, changes in compensation for Lubei Chemical executives, however, show a puzzling “upside-down” trend.

According to the detailed figures disclosed in the 2025 annual report section “Compensation of directors and senior management,” compared with the company’s 2025 performance, the executive team’s pay is “guaranteed regardless of conditions”: chairman Chen Shuchang’s compensation in 2025 was 1.1811 million yuan, up nearly 100k yuan from 1.0846 million yuan in 2024; general manager Feng Xiangyi’s compensation in 2025 was 1.0228 million yuan, up 100.5k yuan from 0.9223 million yuan in 2024; and the compensation of director and financial director and vice general manager Ma Wenju increased from 507.6k yuan in 2024 to more than 300k yuan, with her compensation in 2025 at 816.5k yuan.

With the “plate” of attributable net profit being only around 5.09B yuan, the executive team still maintained an overall increase in both aggregate and individual compensation. In 2025, in “the changes in shareholding and compensation of incumbent directors and senior management personnel, and those who left during the reporting period,” the total pre-tax compensation paid by the company to 13 people was 6.4062 million yuan, up 173.2k yuan compared with 2024 (also 13 people), which was 6.2330 million yuan.

When interviewing a reporter from The Economic Daily News, a capital market insider who understands Lubei Chemical said: “As a state-owned enterprise, given how bad the performance is, having compensation at this level is also not too bad.” He added that, this year, the CSRC has clear requirements for the pay system for executives and supervisors of listed companies, which should be linked to performance. “If compensation is still rising while profits are falling, it doesn’t make sense.”

In October 2025, the CSRC revised and issued the “Code of Corporate Governance for Listed Companies,” which will take effect on January 1, 2026. In it, regarding “improving the incentive and restraint mechanisms for listed companies,” the code clearly stipulates that the compensation of directors and senior executives should be commensurate with the company’s operating performance and individuals’ performance. If a listed company changes from profit to loss, or loss expands, compared with the previous accounting year, and the average performance-based compensation of directors and senior executives does not decline accordingly, the company shall disclose the reasons, etc.

On the morning of March 31, regarding the situation where the company’s performance fell but its executives got pay raises, a reporter from The Economic Daily News contacted Lubei Chemical. A relevant person-in-charge said: “Last year’s operating situation was relatively normal. Although performance declined to some extent, the work of management was still qualified, and management’s wages did not increase significantly.” The person also emphasized that the company’s performance and the executives’ wages are “based on the workload in the specific areas each person manages on a day-to-day basis, and by observing his or her work performance,” and believed that “the overall scale is not large.”

It is worth noting that Lubei Chemical’s 2025 annual report mentions: “During the reporting period, the company’s assessment of senior management adopts a combination of quantitative and qualitative approaches and implements differentiated indicators for different positions… the incentive mechanism for senior management is mainly performance-based compensation… annual performance-based compensation is determined based on annual operating targets, and is calculated based on the company’s operating benefits during the assessment period and the completion of each individual’s work performance.”

However, given the objective facts that “operating performance fell by 80% year on year” and “the decline in non-recurring net profit exceeded 90%,” executive performance-based compensation did not decrease but instead increased. This casts doubt on its so-called “quantitative assessment” being linked to “operating targets.”

High履职 risk but low compensation? Board secretary responds: “special circumstances”

While the chairman and some executives enjoy pay increases of more than 100k yuan, the board secretary—an important hub for information disclosure and compliance governance for the listed company—shows a different situation in terms of compensation.

Lubei Chemical’s 2025 financial report shows that the board secretary, Lin Hongbo, who only took office on May 9, 2025, received only 269.7k yuan in actual compensation for the full year—placing her at the bottom among the company’s executive layer (senior management personnel) compensation.

According to Sina Finance’s “2024 A-share Board Secretary Data Report,” the average annual salary of A-share board secretaries in 2024 was about 754.3k yuan. A reporter from The Economic Daily News found that compared with Lubei Chemical, board secretaries’ annual salaries at other listed companies in Binzhou were much closer to each other but differed significantly from hers. Specifically, Bohai Automobile’s board secretary’s compensation in 2024 was 902.6k yuan; Binhua Shares’ board secretary’s compensation in 2024 was 819.2k yuan; and Sanyuan Bio’s board secretary’s compensation in 2024 was 600k yuan.

It is worth noting that, as statutory senior executives clearly specified by the “Company Law of the People’s Republic of China” and the “Code of Corporate Governance for Listed Companies,” the board secretary bears core statutory responsibilities such as information disclosure, investor relations management, and the day-to-day operation of the board, and has direct responsibility for the truthfulness, accuracy, and completeness of periodic reports.

As supervision over illegal information disclosure continues to be tightened in 2025, requirements for board secretaries’ information disclosure duties have also become increasingly strict—from massive fines to being barred from the market. Punishments faced by board secretaries due to information disclosure issues are growing increasingly severe. According to statistics from Tushang (iFinD), in 2025 more than 200 listed companies were filed for investigation for suspected violations of information disclosure, and the companies under investigation cover multiple market tiers including the main board, ChiNext, and the STAR Market.

On March 17, 2026, the Shenzhen CSRC took regulatory measures at once against two listed companies, Yahui Long and Yingjixin. The reasons for the two companies’ penalties were completely一致—both involved conducting non-compliant information disclosure by riding the hotspot of brain-machine interface. The board secretaries of the two companies were respectively fined 1.5 million yuan and were proposed to be fined 800k yuan.

If the annual salary level of Lubei Chemical’s board secretary in 2025 is used as the baseline, once the company faces regulatory penalties in 2025 due to its annual report or other information disclosure issues, the board secretary personally would face the risk of a large fine, which could have a major impact on her personally.

For “low pay but high responsibility,” a reporter from The Economic Daily News asked Lubei Chemical’s board secretary, Lin Hongbo, the following: since last year’s regulatory penalties were strengthened and the board secretary role is a high-risk position, if a listed company encounters problems and receives penalties, how should one view the significant risk faced by the board secretary if the annual salary is very low?

Lin Hongbo said: “My compensation is a special case, and there’s nothing much to say.” She added: “Although there is consideration in this regard, I believe that the company’s management recognizes the board secretary’s performance of duties, and there will be related considerations in this regard.”

The Economic Daily News