Sun Hung Kai & Co. Limited's (HKG:86) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Sun Hung Kai to hold its Annual General Meeting on 28th of May
• Salary of HK$15.2m is part of CEO Seng Huang Lee's total remuneration
• The overall pay is 265% above the industry average
• Sun Hung Kai's three-year loss to shareholders was 16% while its EPS was down 102% over the past three years

The results at Sun Hung Kai & Co. Limited (HKG:86) have been quite disappointing recently and CEO Seng Huang Lee bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28th 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Sun Hung Kai

Comparing Sun Hung Kai & Co. Limited's CEO Compensation With The Industry

According to our data, Sun Hung Kai & Co. Limited has a market capitalization of HK$5.1b, and paid its CEO total annual compensation worth HK$16m over the year to December 2023. That's a slight decrease of 3.9% on the prior year. Notably, the salary which is HK$15.2m, represents most of the total compensation being paid.

On comparing similar companies from the Hong Kong Consumer Finance industry with market caps ranging from HK$3.1b to HK$12b, we found that the median CEO total compensation was HK$4.3m. Hence, we can conclude that Seng Huang Lee is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$15m	HK$15m	98%
Other	HK$390k	HK$890k	2%
Total Compensation	HK$16m	HK$16m	100%

Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. Sun Hung Kai has gone down a largely traditional route, paying Seng Huang Lee a high salary, giving it preference over 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.

Sun Hung Kai & Co. Limited's Growth

Sun Hung Kai & Co. Limited has reduced its earnings per share by 102% a year over the last three years. Its revenue is down 9.1% over the previous 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sun Hung Kai & Co. Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Sun Hung Kai & Co. Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Sun Hung Kai pays its CEO a majority of 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Sun Hung Kai that you should be aware of before investing.

Switching gears from Sun Hung Kai, 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.