Key Insights

• Ri Ying Holdings' Annual General Meeting to take place on 17th of March
• CEO Chi Keung Lau's total compensation includes salary of HK$1.78m
• The overall pay is comparable to the industry average
• Ri Ying Holdings' EPS declined by 90% over the past three years while total shareholder loss over the past three years was 26%

Shareholders will probably not be too impressed with the underwhelming results at Ri Ying Holdings Limited (HKG:1741) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 17th of March. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Ri Ying Holdings

How Does Total Compensation For Chi Keung Lau Compare With Other Companies In The Industry?

According to our data, Ri Ying Holdings Limited has a market capitalization of HK$944m, and paid its CEO total annual compensation worth HK$2.4m over the year to September 2022. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at HK$1.78m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. This suggests that Ri Ying Holdings remunerates its CEO largely in line with the industry average.

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. Our data reveals that Ri Ying Holdings allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Ri Ying Holdings Limited's Growth Numbers

Ri Ying Holdings Limited has reduced its earnings per share by 90% a year over the last three years. Its revenue is down 51% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Ri Ying Holdings Limited Been A Good Investment?

Since shareholders would have lost about 26% over three years, some Ri Ying Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which don't sit too well with us) in Ri Ying Holdings we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.