Key Insights

• Applied Development Holdings' Annual General Meeting to take place on 12th of December
• Salary of HK$1.03m is part of CEO Zhanming Wu's total remuneration
• Total compensation is 35% below industry average
• Applied Development Holdings' EPS grew by 27% over the past three years while total shareholder loss over the past three years was 66%

Shareholders may be wondering what CEO Zhanming Wu plans to do to improve the less than great performance at Applied Development Holdings Limited (HKG:519) recently. At the next AGM coming up on 12th of December, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Applied Development Holdings

Comparing Applied Development Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Applied Development Holdings Limited has a market capitalization of HK$211m, and reported total annual CEO compensation of HK$1.4m for the year to June 2023. Notably, that's an increase of 8.7% over the year before. We note that the salary portion, which stands at HK$1.03m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. In other words, Applied Development Holdings pays its CEO lower than the industry median. What's more, Zhanming Wu holds HK$57m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Applied Development Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Applied Development Holdings Limited's Growth

Applied Development Holdings Limited has seen its earnings per share (EPS) increase by 27% a year over the past three years. In the last year, its revenue is up 547%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Applied Development Holdings Limited Been A Good Investment?

The return of -66% over three years would not have pleased Applied Development Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

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 4 warning signs for Applied Development Holdings (2 are concerning!) that you should be aware of before investing here.

Important note: Applied Development Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.