Here's Why Shareholders May Want To Be Cautious With Increasing Golden Resources Development International Limited's (HKG:677) CEO Pay Packet

By
Simply Wall St
Published
August 23, 2021
SEHK:677
Source: Shutterstock

The share price of Golden Resources Development International Limited (HKG:677) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 30 August 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Golden Resources Development International

How Does Total Compensation For Anthony Lam Compare With Other Companies In The Industry?

According to our data, Golden Resources Development International Limited has a market capitalization of HK$1.0b, and paid its CEO total annual compensation worth HK$4.3m over the year to March 2021. We note that's an increase of 19% above last year. We note that the salary portion, which stands at HK$3.42m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.3m. Hence, we can conclude that Anthony Lam is remunerated higher than the industry median.

Component20212020Proportion (2021)
Salary HK$3.4m HK$3.1m 79%
Other HK$900k HK$496k 21%
Total CompensationHK$4.3m HK$3.6m100%

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. Golden Resources Development International sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

ceo-compensation
SEHK:677 CEO Compensation August 23rd 2021

A Look at Golden Resources Development International Limited's Growth Numbers

Over the last three years, Golden Resources Development International Limited has shrunk its earnings per share by 15% per year. It saw its revenue drop 7.0% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Golden Resources Development International Limited Been A Good Investment?

Boasting a total shareholder return of 47% over three years, Golden Resources Development International Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Golden Resources Development International that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.
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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.