We Think Shareholders May Want To Consider A Review Of SOCAM Development Limited's (HKG:983) CEO Compensation Package

Key Insights

• SOCAM Development to hold its Annual General Meeting on 29th of May
• Salary of HK$5.85m is part of CEO Freddy Lee's total remuneration
• The overall pay is 186% above the industry average
• SOCAM Development's three-year loss to shareholders was 69% while its EPS was down 59% over the past three years

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SOCAM Development Limited (HKG:983) has not performed well recently and CEO Freddy Lee will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for SOCAM Development

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

According to our data, SOCAM Development Limited has a market capitalization of HK$146m, and paid its CEO total annual compensation worth HK$6.1m over the year to December 2024. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$5.85m constitutes the majority of total compensation received by 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. Accordingly, our analysis reveals that SOCAM Development Limited pays Freddy Lee north of the industry median.

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. SOCAM Development is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at SOCAM Development Limited's Growth Numbers

SOCAM Development Limited has reduced its earnings per share by 59% a year over the last three years. In the last year, its revenue is up 11%.

Few shareholders would be pleased to read that EPS have declined. 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. 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 SOCAM Development Limited Been A Good Investment?

With a total shareholder return of -69% over three years, SOCAM Development Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Freddy receives almost all of their compensation through a salary. 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. 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.

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.