Key Insights

• Lai Fung Holdings' Annual General Meeting to take place on 13th of December
• Salary of HK$1.61m is part of CEO Lester Lam's total remuneration
• The total compensation is similar to the average for the industry
• Lai Fung Holdings' three-year loss to shareholders was 77% while its EPS was down 17% over the past three years

Shareholders of Lai Fung Holdings Limited (HKG:1125) 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. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 13th of December, 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 Lai Fung Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Lai Fung Holdings Limited has a market capitalization of HK$410m, and reported total annual CEO compensation of HK$1.6m for the year to July 2024. This was the same amount the CEO received in the prior year. In particular, the salary of HK$1.61m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.8m. From this we gather that Lester Lam is paid around the median for CEOs in the industry.

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Lai Fung Holdings has gone down a largely traditional route, paying Lester Lam a high salary, giving it preference over non-salary benefits. 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.

Lai Fung Holdings Limited's Growth

Lai Fung Holdings Limited has reduced its earnings per share by 17% a year over the last three years. It achieved revenue growth of 22% 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. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Fung Holdings Limited Been A Good Investment?

With a total shareholder return of -77% over three years, Lai Fung Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Lester receives almost all of their compensation through a salary. 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 identified 3 warning signs for Lai Fung Holdings (2 are potentially serious!) that you should be aware of before investing here.

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.