In the past three years, the share price of Pokfulam Development Company Limited (HKG:225) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 17 February 2023 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.
See our latest analysis for Pokfulam Development
Comparing Pokfulam Development Company Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Pokfulam Development Company Limited has a market capitalization of HK$1.0b, and reported total annual CEO compensation of HK$2.4m for the year to September 2022. This was the same amount the CEO received in the prior year. Notably, the salary which is HK$2.26m, represents most of the total compensation being paid.
In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.2m. So it looks like Pokfulam Development compensates Abraham Wong in line with the median for the industry. Furthermore, Abraham Wong directly owns HK$764m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2022 | 2021 | Proportion (2022) |
| Salary | HK$2.3m | HK$2.3m | 95% |
| Other | HK$110k | HK$110k | 5% |
| Total Compensation | HK$2.4m | HK$2.4m | 100% |
Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. Pokfulam Development is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.
A Look at Pokfulam Development Company Limited's Growth Numbers
Over the last three years, Pokfulam Development Company Limited has shrunk its earnings per share by 52% per year. It achieved revenue growth of 17% over the last year.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Pokfulam Development Company Limited Been A Good Investment?
Since shareholders would have lost about 29% over three years, some Pokfulam Development Company Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Abraham receives almost all of their compensation through a salary. The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company's remuneration policies and evaluate if the board's judgement and decision-making is aligned with that of the company's shareholders.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Pokfulam Development (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Pokfulam Development, 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.