Key Insights

• Capital Estate's Annual General Meeting to take place on 19th of January
• Total pay for CEO Stephen Chu includes HK$2.62m salary
• Total compensation is similar to the industry average
• Capital Estate's three-year loss to shareholders was 57% while its EPS was down 24% over the past three years

Capital Estate Limited (HKG:193) has not performed well recently and CEO Stephen Chu will probably need to up their game. At the upcoming AGM on 19th of January, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Capital Estate

How Does Total Compensation For Stephen Chu Compare With Other Companies In The Industry?

At the time of writing, our data shows that Capital Estate Limited has a market capitalization of HK$33m, and reported total annual CEO compensation of HK$2.6m for the year to July 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary of HK$2.6m is the entirety of the CEO compensation.

For comparison, other companies in the Hong Kong Hospitality industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.2m. From this we gather that Stephen Chu is paid around the median for CEOs in the industry. What's more, Stephen Chu holds HK$8.1m 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, around 83% of total compensation represents salary and 17% is other remuneration. Speaking on a company level, Capital Estate prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Capital Estate Limited's Growth

Over the last three years, Capital Estate Limited has shrunk its earnings per share by 24% per year. Its revenue is down 58% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Capital Estate Limited Been A Good Investment?

With a total shareholder return of -57% over three years, Capital Estate Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Capital Estate rewards its CEO solely through a salary, ignoring non-salary benefits completely. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Capital Estate (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Capital Estate, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.