We Think Some Shareholders May Hesitate To Increase Lippo Limited's (HKG:226) CEO Compensation

Key Insights

• Lippo will host its Annual General Meeting on 6th of June
• CEO John Lee's total compensation includes salary of HK$1.32m
• The overall pay is 50% above the industry average
• Over the past three years, Lippo's EPS grew by 57% and over the past three years, the total loss to shareholders 65%

The underwhelming share price performance of Lippo Limited (HKG:226) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 6th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Lippo

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

At the time of writing, our data shows that Lippo Limited has a market capitalization of HK$399m, and reported total annual CEO compensation of HK$3.1m for the year to December 2023. That's a fairly small increase of 3.4% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$1.3m.

In comparison with other companies in the Hong Kong Consumer Retailing industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. Accordingly, our analysis reveals that Lippo Limited pays John Lee north of the industry median. Furthermore, John Lee directly owns HK$835k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$1.3m	HK$1.2m	42%
Other	HK$1.8m	HK$1.8m	58%
Total Compensation	HK$3.1m	HK$3.0m	100%

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. In Lippo's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Lippo Limited's Growth Numbers

Lippo Limited has seen its earnings per share (EPS) increase by 57% a year over the past three years. It achieved revenue growth of 20% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Lippo Limited Been A Good Investment?

With a total shareholder return of -65% over three years, Lippo Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 Lippo that investors should think about before committing capital to this stock.

Switching gears from Lippo, 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.