Key Insights

• LH Group to hold its Annual General Meeting on 6th of June
• CEO Simon Wong's total compensation includes salary of HK$3.37m
• Total compensation is 112% above industry average
• Over the past three years, LH Group's EPS fell by 14% and over the past three years, the total loss to shareholders 0.3%

As many shareholders of LH Group Limited (HKG:1978) will be aware, they have not made a gain on their investment in the past three years. Per share earnings growth is also lacking, despite revenue growth. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 6th of June, where they can impact on future company performance by voting on resolutions, including executive compensation. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

How Does Total Compensation For Simon Wong Compare With Other Companies In The Industry?

Our data indicates that LH Group Limited has a market capitalization of HK$648m, and total annual CEO compensation was reported as HK$4.4m for the year to December 2023. We note that's a small decrease of 6.8% on last year. In particular, the salary of HK$3.37m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Hospitality industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. This suggests that Simon Wong is paid more than the median for the industry.

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. It's interesting to note that LH Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at LH Group Limited's Growth Numbers

Over the last three years, LH Group Limited has shrunk its earnings per share by 14% per year. Its revenue is up 20% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 LH Group Limited Been A Good Investment?

With a three year total loss of 0.3% for the shareholders, LH Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for LH Group that investors should be aware of in a dynamic business environment.

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.