Key Insights

• SH Group (Holdings) will host its Annual General Meeting on 29th of August
• Total pay for CEO Man Ching Lau includes HK$2.35m salary
• The total compensation is similar to the average for the industry
• SH Group (Holdings)'s three-year loss to shareholders was 81% while its EPS was down 116% over the past three years

SH Group (Holdings) Limited (HKG:1637) has not performed well recently and CEO Man Ching Lau will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29th of August. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

How Does Total Compensation For Man Ching Lau Compare With Other Companies In The Industry?

At the time of writing, our data shows that SH Group (Holdings) Limited has a market capitalization of HK$35m, and reported total annual CEO compensation of HK$2.5m for the year to March 2024. We note that's a small decrease of 5.3% on last year. Notably, the salary which is HK$2.35m, represents most of the total compensation being paid.

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. This suggests that SH Group (Holdings) remunerates its CEO largely in line with the industry average. What's more, Man Ching Lau holds HK$4.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. According to our research, SH Group (Holdings) has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at SH Group (Holdings) Limited's Growth Numbers

Over the last three years, SH Group (Holdings) Limited has shrunk its earnings per share by 116% per year. Its revenue is down 8.2% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 SH Group (Holdings) Limited Been A Good Investment?

The return of -81% over three years would not have pleased SH Group (Holdings) Limited shareholders. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 SH Group (Holdings) 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.