Shareholders May Find It Hard To Justify Increasing Sam Woo Construction Group Limited's (HKG:3822) CEO Compensation For Now

In the past three years, the share price of Sam Woo Construction Group Limited (HKG:3822) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 07 September 2021. 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.

Check out our latest analysis for Sam Woo Construction Group

How Does Total Compensation For Chun Kwok Lau Compare With Other Companies In The Industry?

Our data indicates that Sam Woo Construction Group Limited has a market capitalization of HK$185m, and total annual CEO compensation was reported as HK$1.5m for the year to March 2021. There was no change in the compensation compared to last year. In particular, the salary of HK$840.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.8m. From this we gather that Chun Kwok Lau is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$840k	HK$840k	56%
Other	HK$670k	HK$670k	44%
Total Compensation	HK$1.5m	HK$1.5m	100%

On an industry level, around 90% of total compensation represents salary and 10% is other remuneration. In Sam Woo Construction Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Sam Woo Construction Group Limited's Growth

Over the past three years, Sam Woo Construction Group Limited has seen its earnings per share (EPS) grow by 31% per year. In the last year, its revenue is down 61%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sam Woo Construction Group Limited Been A Good Investment?

The return of -30% over three years would not have pleased Sam Woo Construction Group Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At 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 will likely improve performance in the future.

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 2 warning signs (and 1 which is concerning) in Sam Woo Construction Group 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.
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