Key Insights

• Eminence Enterprise will host its Annual General Meeting on 22nd of August
• Total pay for CEO Law Kau Lai includes HK$480.0k salary
• The overall pay is 76% below the industry average
• Eminence Enterprise's three-year loss to shareholders was 99% while its EPS grew by 18% over the past three years

The performance at Eminence Enterprise Limited (HKG:616) has been rather lacklustre of late and shareholders may be wondering what CEO Law Kau Lai is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 22nd of August. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

Comparing Eminence Enterprise Limited's CEO Compensation With The Industry

Our data indicates that Eminence Enterprise Limited has a market capitalization of HK$42m, and total annual CEO compensation was reported as HK$498k for the year to March 2024. This was the same amount the CEO received in the prior year. Notably, the salary which is HK$480.0k, represents most of the total compensation being paid.

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. In other words, Eminence Enterprise pays its CEO lower than the industry median.

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Eminence Enterprise pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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 Eminence Enterprise Limited's Growth Numbers

Over the past three years, Eminence Enterprise Limited has seen its earnings per share (EPS) grow by 18% per year. It achieved revenue growth of 13% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Eminence Enterprise Limited Been A Good Investment?

With a total shareholder return of -99% over three years, Eminence Enterprise Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Law Kau receives almost all of their compensation through a salary. The loss to shareholders over the past three years is certainly concerning. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board's judgement and decision-making is aligned with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 6 warning signs (and 4 which can't be ignored) in Eminence Enterprise we think you should know about.

Important note: Eminence Enterprise 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.