Increases to CEO Compensation Might Be Put On Hold For Now at Ching Lee Holdings Limited (HKG:3728)

Key Insights

• Ching Lee Holdings' Annual General Meeting to take place on 26th of August
• CEO Choi Wah Ng's total compensation includes salary of HK$2.22m
• The overall pay is 377% above the industry average
• Ching Lee Holdings' EPS declined by 2.5% over the past three years while total shareholder loss over the past three years was 74%

In the past three years, the share price of Ching Lee Holdings Limited (HKG:3728) 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 26th of August 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 Ching Lee Holdings

How Does Total Compensation For Choi Wah Ng Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ching Lee Holdings Limited has a market capitalization of HK$48m, and reported total annual CEO compensation of HK$11m for the year to March 2024. Notably, that's an increase of 28% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$2.2m.

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. Hence, we can conclude that Choi Wah Ng is remunerated higher than the industry median. What's more, Choi Wah Ng holds HK$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	HK$2.2m	HK$2.3m	21%
Other	HK$8.5m	HK$6.1m	79%
Total Compensation	HK$11m	HK$8.4m	100%

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. Ching Lee Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Ching Lee Holdings Limited's Growth

Over the last three years, Ching Lee Holdings Limited has shrunk its earnings per share by 2.5% per year. Its revenue is up 27% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ching Lee Holdings Limited Been A Good Investment?

The return of -74% over three years would not have pleased Ching Lee Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 3 which are a bit concerning) in Ching Lee Holdings we think you should know about.

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.