Shareholders Will Probably Be Cautious Of Increasing Powerlong Real Estate Holdings Limited's (HKG:1238) CEO Compensation At The Moment

Key Insights

• Powerlong Real Estate Holdings to hold its Annual General Meeting on 14th of June
• CEO Wa Fong Hoi's total compensation includes salary of CN¥1.17m
• The overall pay is 47% below the industry average
• Powerlong Real Estate Holdings' EPS declined by 97% over the past three years while total shareholder loss over the past three years was 90%

The disappointing performance at Powerlong Real Estate Holdings Limited (HKG:1238) will make some shareholders rather disheartened. At the upcoming AGM on 14th of June, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Powerlong Real Estate Holdings

Comparing Powerlong Real Estate Holdings Limited's CEO Compensation With The Industry

Our data indicates that Powerlong Real Estate Holdings Limited has a market capitalization of HK$2.8b, and total annual CEO compensation was reported as CN¥1.8m for the year to December 2023. There was no change in the compensation compared to last year. In particular, the salary of CN¥1.17m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Real Estate industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was CN¥3.5m. That is to say, Wa Fong Hoi is paid under the industry median. Furthermore, Wa Fong Hoi directly owns HK$412m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.2m	CN¥1.2m	64%
Other	CN¥663k	CN¥663k	36%
Total Compensation	CN¥1.8m	CN¥1.8m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Powerlong Real Estate Holdings sets aside a smaller share of compensation for salary, in comparison to the overall 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 Powerlong Real Estate Holdings Limited's Growth Numbers

Powerlong Real Estate Holdings Limited has reduced its earnings per share by 97% a year over the last three years. In the last year, its revenue is down 27%.

The decline in EPS is a bit concerning. 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 Powerlong Real Estate Holdings Limited Been A Good Investment?

With a total shareholder return of -90% over three years, Powerlong Real Estate Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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.

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 shouldn't be ignored) in Powerlong Real Estate Holdings we think you should know about.

Important note: Powerlong Real Estate Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.