Key Insights

• Thelloy Development Group's Annual General Meeting to take place on 23rd of August
• Salary of HK$1.92m is part of CEO Eddie Lam's total remuneration
• Total compensation is similar to the industry average
• Thelloy Development Group's three-year loss to shareholders was 54% while its EPS was down 27% over the past three years

The results at Thelloy Development Group Limited (HKG:1546) have been quite disappointing recently and CEO Eddie Lam bears some responsibility for this. At the upcoming AGM on 23rd of August, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Eddie Lam Compare With Other Companies In The Industry?

At the time of writing, our data shows that Thelloy Development Group Limited has a market capitalization of HK$86m, and reported total annual CEO compensation of HK$2.3m for the year to March 2024. We note that's a small decrease of 6.8% on last year. Notably, the salary which is HK$1.92m, represents most of the total compensation being paid.

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 HK$2.3m. From this we gather that Eddie Lam is paid around the median for CEOs in the industry. Furthermore, Eddie Lam directly owns HK$63m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. There isn't a significant difference between Thelloy Development Group and the broader market, in terms of salary allocation in the overall compensation package. 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 Thelloy Development Group Limited's Growth Numbers

Over the last three years, Thelloy Development Group Limited has shrunk its earnings per share by 27% per year. In the last year, its revenue changed by just 0.4%.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Thelloy Development Group Limited Been A Good Investment?

Few Thelloy Development Group Limited shareholders would feel satisfied with the return of -54% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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.

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 Thelloy Development Group (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Thelloy Development Group, 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.