Key Insights

• Yau Lee Holdings' Annual General Meeting to take place on 29th of August
• CEO Ip Kuen Wong's total compensation includes salary of HK$10.4m
• The overall pay is 406% above the industry average
• Yau Lee Holdings' three-year loss to shareholders was 2.8% while its EPS was down 24% over the past three years

In the past three years, shareholders of Yau Lee Holdings Limited (HKG:406) have seen a loss on their investment. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 29th of August, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Comparing Yau Lee Holdings Limited's CEO Compensation With The Industry

Our data indicates that Yau Lee Holdings Limited has a market capitalization of HK$517m, and total annual CEO compensation was reported as HK$11m for the year to March 2024. That's a fairly small increase of 3.6% over the previous year. We note that the salary portion, which stands at HK$10.4m constitutes the majority of total compensation received by the CEO.

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. Hence, we can conclude that Ip Kuen Wong is remunerated higher than the industry median. Moreover, Ip Kuen Wong also holds HK$316m worth of Yau Lee Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Yau Lee Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Yau Lee Holdings Limited's Growth Numbers

Over the last three years, Yau Lee Holdings Limited has shrunk its earnings per share by 24% per year. It achieved revenue growth of 17% over the last year.

The decrease in EPS could be a concern for some investors. 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. 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 Yau Lee Holdings Limited Been A Good Investment?

Given the total shareholder loss of 2.8% over three years, many shareholders in Yau Lee Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Yau Lee Holdings we think you should know about.

Switching gears from Yau Lee Holdings, 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.