We Discuss Why CR Construction Group Holdings Limited's (HKG:1582) CEO Compensation May Be Closely Reviewed

Key Insights

• CR Construction Group Holdings will host its Annual General Meeting on 21st of June
• Total pay for CEO Kar Yin Lin includes HK$2.86m salary
• The total compensation is 92% higher than the average for the industry
• Over the past three years, CR Construction Group Holdings' EPS fell by 6.9% and over the past three years, the total loss to shareholders 6.6%

CR Construction Group Holdings Limited (HKG:1582) has not performed well recently and CEO Kar Yin Lin will probably need to up their game. At the upcoming AGM on 21st of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for CR Construction Group Holdings

How Does Total Compensation For Kar Yin Lin Compare With Other Companies In The Industry?

According to our data, CR Construction Group Holdings Limited has a market capitalization of HK$218m, and paid its CEO total annual compensation worth HK$4.1m over the year to December 2023. That's just a smallish increase of 4.6% on last year. Notably, the salary which is HK$2.86m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. Hence, we can conclude that Kar Yin Lin is remunerated higher than the industry median. What's more, Kar Yin Lin holds HK$435k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	HK$2.9m	HK$3.0m	69%
Other	HK$1.3m	HK$1.0m	31%
Total Compensation	HK$4.1m	HK$4.0m	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. CR Construction Group Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 CR Construction Group Holdings Limited's Growth Numbers

Over the last three years, CR Construction Group Holdings Limited has shrunk its earnings per share by 6.9% per year. In the last year, its revenue is down 15%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CR Construction Group Holdings Limited Been A Good Investment?

Given the total shareholder loss of 6.6% over three years, many shareholders in CR Construction Group Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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 CR Construction Group Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from CR Construction Group Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com