We Think Sam Woo Construction Group Limited's (HKG:3822) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Sam Woo Construction Group to hold its Annual General Meeting on 20th of September
• CEO Chun Kwok Lau's total compensation includes salary of HK$910.0k
• The total compensation is similar to the average for the industry
• Sam Woo Construction Group's EPS declined by 98% over the past three years while total shareholder loss over the past three years was 59%

Sam Woo Construction Group Limited (HKG:3822) has not performed well recently and CEO Chun Kwok Lau will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 20th of September. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Sam Woo Construction Group

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

At the time of writing, our data shows that Sam Woo Construction Group Limited has a market capitalization of HK$76m, and reported total annual CEO compensation of HK$1.5m for the year to March 2023. This was the same amount the CEO received in the prior year. In particular, the salary of HK$910.0k, makes up a huge portion of the total compensation being paid to the CEO.

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$2.1m. From this we gather that Chun Kwok Lau is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$910k	HK$910k	60%
Other	HK$600k	HK$600k	40%
Total Compensation	HK$1.5m	HK$1.5m	100%

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. Sam Woo Construction Group pays a modest slice of remuneration through salary, as compared 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

Sam Woo Construction Group Limited has reduced its earnings per share by 98% a year over the last three years. It achieved revenue growth of 15% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Sam Woo Construction Group Limited Been A Good Investment?

With a total shareholder return of -59% over three years, Sam Woo Construction Group Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Sam Woo Construction Group that investors should be aware of in a dynamic business environment.

Switching gears from Sam Woo Construction Group, 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.