Key Insights

• Lai Fung Holdings will host its Annual General Meeting on 15th of December
• CEO Lester Lam's total compensation includes salary of HK$1.61m
• Total compensation is similar to the industry average
• Lai Fung Holdings' EPS grew by 50% over the past three years while total shareholder loss over the past three years was 64%

In the past three years, the share price of Lai Fung Holdings Limited (HKG:1125) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 15th of December. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Lai Fung Holdings

How Does Total Compensation For Lester Lam Compare With Other Companies In The Industry?

At the time of writing, our data shows that Lai Fung Holdings Limited has a market capitalization of HK$751m, and reported total annual CEO compensation of HK$1.6m for the year to July 2023. That's slightly lower by 3.6% over the previous year. In particular, the salary of HK$1.61m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. So it looks like Lai Fung Holdings compensates Lester Lam in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Lai Fung Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

Lai Fung Holdings Limited's Growth

Lai Fung Holdings Limited's earnings per share (EPS) grew 50% per year over the last three years. Its revenue is down 28% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Lai Fung Holdings Limited Been A Good Investment?

The return of -64% over three years would not have pleased Lai Fung Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Lai Fung Holdings 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. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Lai Fung Holdings you should be aware of, and 2 of them are concerning.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.