We Think Lee Kee Holdings Limited's (HKG:637) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Lee Kee Holdings to hold its Annual General Meeting on 27th of August
• CEO Clara Chan's total compensation includes salary of HK$2.59m
• The overall pay is 46% above the industry average
• Lee Kee Holdings' EPS declined by 107% over the past three years while total shareholder loss over the past three years was 48%

Shareholders will probably not be too impressed with the underwhelming results at Lee Kee Holdings Limited (HKG:637) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27th of August. 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.

View our latest analysis for Lee Kee Holdings

How Does Total Compensation For Clara Chan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Lee Kee Holdings Limited has a market capitalization of HK$127m, and reported total annual CEO compensation of HK$3.2m for the year to March 2024. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$2.59m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.2m. Hence, we can conclude that Clara Chan is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	HK$2.6m	HK$2.5m	81%
Other	HK$618k	HK$618k	19%
Total Compensation	HK$3.2m	HK$3.1m	100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. It's interesting to note that Lee Kee Holdings allocates a smaller portion of compensation to salary 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.

Lee Kee Holdings Limited's Growth

Over the last three years, Lee Kee Holdings Limited has shrunk its earnings per share by 107% per year. It saw its revenue drop 23% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Lee Kee Holdings Limited Been A Good Investment?

The return of -48% over three years would not have pleased Lee Kee Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Lee Kee Holdings that investors should think about before committing capital to this stock.

Important note: Lee Kee Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.