We Think Shareholders May Want To Consider A Review Of Henderson Land Development Company Limited's (HKG:12) CEO Compensation Package

Key Insights

• Henderson Land Development's Annual General Meeting to take place on 3rd of June
• CEO Martin Lee's total compensation includes salary of HK$16.0m
• Total compensation is 38% above industry average
• Henderson Land Development's three-year loss to shareholders was 9.5% while its EPS was down 22% over the past three years

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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. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Henderson Land Development

Comparing Henderson Land Development Company Limited's CEO Compensation With The Industry

According to our data, Henderson Land Development Company Limited has a market capitalization of HK$118b, and paid its CEO total annual compensation worth HK$23m over the year to December 2024. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$16.0m, represents most of the total compensation being paid.

On comparing similar companies in the Hong Kong Real Estate industry with market capitalizations above HK$63b, we found that the median total CEO compensation was HK$17m. Hence, we can conclude that Martin Lee is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. In Henderson Land Development's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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 Henderson Land Development Company Limited's Growth Numbers

Over the last three years, Henderson Land Development Company Limited has shrunk its earnings per share by 22% per year. Its revenue is down 8.4% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. 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 Henderson Land Development Company Limited Been A Good Investment?

Given the total shareholder loss of 9.5% over three years, many shareholders in Henderson Land Development Company Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Henderson Land Development that investors should look into moving forward.

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.