Shareholders May Not Be So Generous With Green Economy Development Limited's (HKG:1315) CEO Compensation And Here's Why

Key Insights

• Green Economy Development will host its Annual General Meeting on 27th of September
• CEO Chit Chau's total compensation includes salary of HK$2.40m
• The overall pay is comparable to the industry average
• Green Economy Development's EPS grew by 6.9% over the past three years while total shareholder loss over the past three years was 82%

In the past three years, the share price of Green Economy Development Limited (HKG:1315) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 27th of September could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Green Economy Development

Comparing Green Economy Development Limited's CEO Compensation With The Industry

According to our data, Green Economy Development Limited has a market capitalization of HK$65m, and paid its CEO total annual compensation worth HK$2.4m over the year to March 2024. This was the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$2.4m.

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. This suggests that Green Economy Development remunerates its CEO largely in line with the industry average. Moreover, Chit Chau also holds HK$4.9m worth of Green Economy Development stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$2.4m	HK$2.4m	100%
Other	-	-	-
Total Compensation	HK$2.4m	HK$2.4m	100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. On a company level, Green Economy Development prefers to reward its CEO through a salary, opting not to pay Chit Chau through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Green Economy Development Limited's Growth

Green Economy Development Limited has seen its earnings per share (EPS) increase by 6.9% a year over the past three years. Its revenue is up 19% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well 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 Green Economy Development Limited Been A Good Investment?

The return of -82% over three years would not have pleased Green Economy Development Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Green Economy Development rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still 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 4 warning signs for Green Economy Development (2 make us uncomfortable!) that you should be aware of before investing here.

Important note: Green Economy Development 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.