Key Things To Understand About In Construction Holdings' (HKG:1500) CEO Pay Cheque

The CEO of In Construction Holdings Limited (HKG:1500) is Pak Man Lau, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for In Construction Holdings

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

According to our data, In Construction Holdings Limited has a market capitalization of HK$148m, and paid its CEO total annual compensation worth HK$1.7m over the year to March 2020. Notably, that's an increase of 14% over the year before. In particular, the salary of HK$1.49m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. This suggests that In Construction Holdings remunerates its CEO largely in line with the industry average. What's more, Pak Man Lau holds HK$51m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 91% of total compensation represents salary and 8.7% is other remuneration. Although there is a difference in how total compensation is set, In Construction Holdings more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at In Construction Holdings Limited's Growth Numbers

Over the last three years, In Construction Holdings Limited has shrunk its earnings per share by 31% per year. It achieved revenue growth of 34% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 In Construction Holdings Limited Been A Good Investment?

Given the total shareholder loss of 68% over three years, many shareholders in In Construction Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Pak Man is compensated close to the median for companies of its size, and which belong to the same industry. However, revenues have increased over the past year, a positive sign for the company. In contrast, over the same time span, shareholder returns are negative. EPS growth is also negative, adding insult to injury. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

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 did our research and identified 3 warning signs (and 1 which is concerning) in In Construction Holdings we think you should know about.

Important note: In Construction Holdings 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. 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.
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