It Looks Like Henderson Land Development Company Limited's (HKG:12) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• Henderson Land Development will host its Annual General Meeting on 3rd of June
• Salary of HK$15.8m is part of CEO Martin Lee's total remuneration
• Total compensation is 71% above industry average
• Henderson Land Development's three-year loss to shareholders was 18% while its EPS was down 3.1% over the past three years

Henderson Land Development Company Limited (HKG:12) has not performed well recently and CEO Martin Lee will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 3rd of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Henderson Land Development

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

At the time of writing, our data shows that Henderson Land Development Company Limited has a market capitalization of HK$122b, and reported total annual CEO compensation of HK$23m for the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$15.8m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies in the Hong Kong Real Estate industry with market capitalizations above HK$62b, we found that the median total CEO compensation was HK$14m. This suggests that Martin Lee is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$16m	HK$16m	68%
Other	HK$7.4m	HK$7.4m	32%
Total Compensation	HK$23m	HK$23m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Henderson Land Development 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.

Henderson Land Development Company Limited's Growth

Over the last three years, Henderson Land Development Company Limited has shrunk its earnings per share by 3.1% per year. It achieved revenue growth of 7.9% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Henderson Land Development Company Limited Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Henderson Land Development Company Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Henderson Land Development we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.