Increases to Yau Lee Holdings Limited's (HKG:406) CEO Compensation Might Cool off for now

Key Insights

• Yau Lee Holdings to hold its Annual General Meeting on 29th of August
• CEO Ip Kuen Wong's total compensation includes salary of HK$10.4m
• The overall pay is 406% above the industry average
• Yau Lee Holdings' three-year loss to shareholders was 2.8% while its EPS was down 24% over the past three years

In the past three years, shareholders of Yau Lee Holdings Limited (HKG:406) have seen a loss on their investment. Per share earnings growth is also poor, despite revenues growing. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 29th of August, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

See our latest analysis for Yau Lee Holdings

Comparing Yau Lee Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Yau Lee Holdings Limited has a market capitalization of HK$517m, and reported total annual CEO compensation of HK$11m for the year to March 2024. That's a fairly small increase of 3.6% over the previous year. Notably, the salary which is HK$10.4m, 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$2.3m. This suggests that Ip Kuen Wong is paid more than the median for the industry. What's more, Ip Kuen Wong holds HK$316m 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$10m	HK$10m	91%
Other	HK$1.0m	HK$992k	9%
Total Compensation	HK$11m	HK$11m	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. Although there is a difference in how total compensation is set, Yau Lee Holdings more or less reflects the market in terms of setting the salary. 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 Yau Lee Holdings Limited's Growth Numbers

Yau Lee Holdings Limited has reduced its earnings per share by 24% a year over the last three years. Its revenue is up 17% 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. 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. 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 Yau Lee Holdings Limited Been A Good Investment?

Since shareholders would have lost about 2.8% over three years, some Yau Lee Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. 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. In our study, we found 4 warning signs for Yau Lee Holdings you should be aware of, and 2 of them shouldn't be ignored.

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.