SOCAM Development Limited's (HKG:983) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• SOCAM Development to hold its Annual General Meeting on 30th of May
• Total pay for CEO Freddy Lee includes HK$5.85m salary
• Total compensation is 190% above industry average
• Over the past three years, SOCAM Development's EPS fell by 103% and over the past three years, the total loss to shareholders 60%

In the past three years, the share price of SOCAM Development Limited (HKG:983) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 30th of May and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for SOCAM Development

How Does Total Compensation For Freddy Lee Compare With Other Companies In The Industry?

At the time of writing, our data shows that SOCAM Development Limited has a market capitalization of HK$228m, and reported total annual CEO compensation of HK$6.1m for the year to December 2023. That's a notable decrease of 48% on last year. Notably, the salary which is HK$5.85m, 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$2.1m. This suggests that Freddy Lee is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$5.8m	HK$12m	95%
Other	HK$276k	HK$276k	5%
Total Compensation	HK$6.1m	HK$12m	100%

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. SOCAM Development has gone down a largely traditional route, paying Freddy Lee a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at SOCAM Development Limited's Growth Numbers

Over the last three years, SOCAM Development Limited has shrunk its earnings per share by 103% per year. In the last year, its revenue is up 32%.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. 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 SOCAM Development Limited Been A Good Investment?

Few SOCAM Development Limited shareholders would feel satisfied with the return of -60% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Freddy receives almost all of their compensation through a salary. 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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for SOCAM Development (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: SOCAM Development 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.