We Think Some Shareholders May Hesitate To Increase LFG Investment Holdings Limited's (HKG:3938) CEO Compensation

Key Insights

• LFG Investment Holdings to hold its Annual General Meeting on 13th of August
• Salary of HK$720.0k is part of CEO Gary Mui's total remuneration
• The total compensation is 454% higher than the average for the industry
• LFG Investment Holdings' three-year loss to shareholders was 26% while its EPS was down 63% over the past three years

In the past three years, the share price of LFG Investment Holdings Limited (HKG:3938) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 13th of August, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

See our latest analysis for LFG Investment Holdings

Comparing LFG Investment Holdings Limited's CEO Compensation With The Industry

According to our data, LFG Investment Holdings Limited has a market capitalization of HK$76m, and paid its CEO total annual compensation worth HK$11m over the year to March 2024. Notably, that's an increase of 32% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$720k.

On comparing similar-sized companies in the Hong Kong Capital Markets industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. Hence, we can conclude that Gary Mui is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	HK$720k	HK$720k	7%
Other	HK$10m	HK$7.4m	93%
Total Compensation	HK$11m	HK$8.1m	100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. In LFG Investment Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at LFG Investment Holdings Limited's Growth Numbers

LFG Investment Holdings Limited has reduced its earnings per share by 63% a year over the last three years. It achieved revenue growth of 115% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 LFG Investment Holdings Limited Been A Good Investment?

Since shareholders would have lost about 26% over three years, some LFG Investment Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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 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. That's why we did some digging and identified 2 warning signs for LFG Investment Holdings that investors should think about before committing capital to this stock.

Switching gears from LFG Investment Holdings, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com