Key Insights

• Lai Si Enterprise Holding will host its Annual General Meeting on 25th of June
• Total pay for CEO Harry Lai includes MO$1.62m salary
• The total compensation is similar to the average for the industry
• Lai Si Enterprise Holding's EPS grew by 95% over the past three years while total shareholder loss over the past three years was 39%

Shareholders of Lai Si Enterprise Holding Limited (HKG:2266) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 25th of June. 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.

Comparing Lai Si Enterprise Holding Limited's CEO Compensation With The Industry

Our data indicates that Lai Si Enterprise Holding Limited has a market capitalization of HK$122m, and total annual CEO compensation was reported as MO$1.8m for the year to December 2023. Notably, that's an increase of 8.6% over the year before. We note that the salary portion, which stands at MO$1.62m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Construction industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was MO$2.2m. This suggests that Lai Si Enterprise Holding remunerates its CEO largely in line with the industry average.

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. Lai Si Enterprise Holding pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Lai Si Enterprise Holding Limited's Growth Numbers

Lai Si Enterprise Holding Limited has seen its earnings per share (EPS) increase by 95% a year over the past three years. It saw its revenue drop 49% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Lai Si Enterprise Holding Limited Been A Good Investment?

With a total shareholder return of -39% over three years, Lai Si Enterprise Holding Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which make us uncomfortable) in Lai Si Enterprise Holding we think you should know about.

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.

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