Key Insights

• Asia Allied Infrastructure Holdings' Annual General Meeting to take place on 16th of August
• CEO Derrick Pang's total compensation includes salary of HK$6.70m
• The overall pay is 208% above the industry average
• Over the past three years, Asia Allied Infrastructure Holdings' EPS grew by 85% and over the past three years, the total loss to shareholders 18%

The underwhelming share price performance of Asia Allied Infrastructure Holdings Limited (HKG:711) in the past three years would have disappointed many shareholders. 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 16th of August. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

How Does Total Compensation For Derrick Pang Compare With Other Companies In The Industry?

Our data indicates that Asia Allied Infrastructure Holdings Limited has a market capitalization of HK$794m, and total annual CEO compensation was reported as HK$6.9m for the year to March 2024. That's a notable decrease of 18% on last year. We note that the salary portion, which stands at HK$6.70m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. Hence, we can conclude that Derrick Pang is remunerated higher than the industry median. Moreover, Derrick Pang also holds HK$3.3m worth of Asia Allied Infrastructure Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

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. Asia Allied Infrastructure Holdings 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 total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Asia Allied Infrastructure Holdings Limited's Growth

Asia Allied Infrastructure Holdings Limited's earnings per share (EPS) grew 85% per year over the last three years. In the last year, its revenue is up 7.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Asia Allied Infrastructure Holdings Limited Been A Good Investment?

Given the total shareholder loss of 18% over three years, many shareholders in Asia Allied Infrastructure Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Asia Allied Infrastructure Holdings pays its CEO a majority of compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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. That's why we did our research, and identified 4 warning signs for Asia Allied Infrastructure Holdings (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Important note: Asia Allied Infrastructure 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.