Shareholders Will Probably Not Have Any Issues With Lai Group Holding Company Limited's (HKG:8455) CEO Compensation

Performance at Lai Group Holding Company Limited (HKG:8455) has been rather uninspiring recently and shareholders may be wondering how CEO Ka Sing Siu plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 06 August 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Lai Group Holding

Comparing Lai Group Holding Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Lai Group Holding Company Limited has a market capitalization of HK$75m, and reported total annual CEO compensation of HK$842k for the year to March 2021. That's a modest increase of 4.1% on the prior year. Notably, the salary which is HK$824.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.3m. In other words, Lai Group Holding pays its CEO lower than the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$824k	HK$791k	98%
Other	HK$18k	HK$18k	2%
Total Compensation	HK$842k	HK$809k	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Investors will find it interesting that Lai Group Holding pays the bulk of its rewards through a traditional salary, instead of 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 Lai Group Holding Company Limited's Growth Numbers

Over the last three years, Lai Group Holding Company Limited has shrunk its earnings per share by 37% per year. Its revenue is up 29% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Lai Group Holding Company Limited Been A Good Investment?

The return of -88% over three years would not have pleased Lai Group Holding Company Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Lai Group Holding pays its CEO a majority of compensation through a salary. The loss to shareholders over the past three years is certainly concerning. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Lai Group Holding we think you should know about.

Switching gears from Lai Group Holding, 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. 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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