Here's Why Shareholders Should Examine MECOM Power and Construction Limited's (HKG:1183) CEO Compensation Package More Closely

Key Insights

• MECOM Power and Construction will host its Annual General Meeting on 29th of May
• CEO Sotto Tou's total compensation includes salary of MO$4.20m
• The total compensation is 106% higher than the average for the industry
• MECOM Power and Construction's three-year loss to shareholders was 93% while its EPS was down 97% over the past three years

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MECOM Power and Construction Limited (HKG:1183) has not performed well recently and CEO Sotto Tou will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for MECOM Power and Construction

How Does Total Compensation For Sotto Tou Compare With Other Companies In The Industry?

At the time of writing, our data shows that MECOM Power and Construction Limited has a market capitalization of HK$454m, and reported total annual CEO compensation of MO$4.6m for the year to December 2024. This was the same amount the CEO received in the prior year. In particular, the salary of MO$4.20m, makes up a huge portion of the total compensation being paid to 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. Accordingly, our analysis reveals that MECOM Power and Construction Limited pays Sotto Tou north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	MO$4.2m	MO$4.2m	92%
Other	MO$351k	MO$351k	8%
Total Compensation	MO$4.6m	MO$4.6m	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Our data reveals that MECOM Power and Construction allocates salary more or less in line with the wider market. 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 MECOM Power and Construction Limited's Growth Numbers

Over the last three years, MECOM Power and Construction Limited has shrunk its earnings per share by 97% per year. Revenue was pretty flat on last year.

Overall this is not a very positive result for shareholders. 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. 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 MECOM Power and Construction Limited Been A Good Investment?

Few MECOM Power and Construction Limited shareholders would feel satisfied with the return of -93% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for MECOM Power and Construction (2 don't sit too well with us!) that you should be aware of before investing here.

Important note: MECOM Power and Construction is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.