Key Insights

• Lai Sun Development will host its Annual General Meeting on 13th of December
• Salary of HK$4.76m is part of CEO Julius Lau's total remuneration
• Total compensation is 160% above industry average
• Lai Sun Development's EPS declined by 3.4% over the past three years while total shareholder loss over the past three years was 81%

In the past three years, the share price of Lai Sun Development Company Limited (HKG:488) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 13th of December will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

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

According to our data, Lai Sun Development Company Limited has a market capitalization of HK$1.1b, and paid its CEO total annual compensation worth HK$4.8m over the year to July 2024. This was the same amount the CEO received in the prior year. Notably, the salary of HK$4.8m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.8m. This suggests that Julius Lau is paid more than the median for the industry. Moreover, Julius Lau also holds HK$439k worth of Lai Sun Development stock directly under their own name.

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. At the company level, Lai Sun Development pays Julius Lau solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Lai Sun Development Company Limited's Growth

Over the last three years, Lai Sun Development Company Limited has shrunk its earnings per share by 3.4% per year. Its revenue is up 22% 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. In conclusion we can't form a strong opinion about business performance yet; but it's one 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 Lai Sun Development Company Limited Been A Good Investment?

Few Lai Sun Development Company Limited shareholders would feel satisfied with the return of -81% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Lai Sun Development rewards its CEO solely through a salary, ignoring non-salary benefits completely. The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Lai Sun Development (2 are a bit concerning!) 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.