Key Insights

• Ri Ying Holdings' Annual General Meeting to take place on 13th of March
• Salary of HK$1.80m is part of CEO Chi Keung Lau's total remuneration
• Total compensation is similar to the industry average
• Ri Ying Holdings' three-year loss to shareholders was 61% while its EPS was down 39% over the past three years

Shareholders of Ri Ying Holdings Limited (HKG:1741) will have been dismayed by the negative share price return over the last three years. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. Shareholders will have a chance to take their concerns to the board at the next AGM on 13th of March and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

How Does Total Compensation For Chi Keung Lau Compare With Other Companies In The Industry?

Our data indicates that Ri Ying Holdings Limited has a market capitalization of HK$496m, and total annual CEO compensation was reported as HK$2.0m for the year to September 2023. We note that's a decrease of 18% compared to last year. In particular, the salary of HK$1.80m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. This suggests that Ri Ying Holdings remunerates its CEO largely in line with the industry average.

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Our data reveals that Ri Ying Holdings allocates salary more or less in line with the wider market. 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 Ri Ying Holdings Limited's Growth Numbers

Over the last three years, Ri Ying Holdings Limited has shrunk its earnings per share by 39% per year. Its revenue is up 105% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ri Ying Holdings Limited Been A Good Investment?

The return of -61% over three years would not have pleased Ri Ying Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company's remuneration policies and evaluate if the board's judgement and decision-making is aligned with that of the company's shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Ri Ying Holdings (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.