In Construction Holdings Limited's (HKG:1500) CEO Will Probably Find It Hard To See A Huge Raise This Year

Key Insights

• In Construction Holdings' Annual General Meeting to take place on 20th of September
• CEO Pak Man Lau's total compensation includes salary of HK$1.66m
• The total compensation is similar to the average for the industry
• In Construction Holdings' EPS declined by 95% over the past three years while total shareholder loss over the past three years was 60%

In the past three years, the share price of In Construction Holdings Limited (HKG:1500) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 20th of September 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 why we think shareholders should hold off on a raise for the CEO at the moment.

View our latest analysis for In Construction Holdings

Comparing In Construction Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that In Construction Holdings Limited has a market capitalization of HK$59m, and reported total annual CEO compensation of HK$1.7m for the year to March 2024. That's slightly lower by 5.0% over the previous year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$1.7m.

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. So it looks like In Construction Holdings compensates Pak Man Lau in line with the median for the industry. Furthermore, Pak Man Lau directly owns HK$20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$1.7m	HK$1.6m	100%
Other	-	HK$126k	-
Total Compensation	HK$1.7m	HK$1.8m	100%

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Speaking on a company level, In Construction Holdings prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at In Construction Holdings Limited's Growth Numbers

In Construction Holdings Limited has reduced its earnings per share by 95% a year over the last three years. It achieved revenue growth of 15% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. 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 In Construction Holdings Limited Been A Good Investment?

The return of -60% over three years would not have pleased In Construction Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

In Construction Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for In Construction Holdings that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.