Shareholders Will Probably Hold Off On Increasing EverChina Int'l Holdings Company Limited's (HKG:202) CEO Compensation For The Time Being

Key Insights

• EverChina Int'l Holdings will host its Annual General Meeting on 28th of September
• Salary of HK$4.61m is part of CEO Richard Lam's total remuneration
• Total compensation is 171% above industry average
• Over the past three years, EverChina Int'l Holdings' EPS grew by 25% and over the past three years, the total loss to shareholders 36%

In the past three years, the share price of EverChina Int'l Holdings Company Limited (HKG:202) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 28th of September. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for EverChina Int'l Holdings

How Does Total Compensation For Richard Lam Compare With Other Companies In The Industry?

At the time of writing, our data shows that EverChina Int'l Holdings Company Limited has a market capitalization of HK$861m, and reported total annual CEO compensation of HK$5.3m for the year to March 2023. We note that's an increase of 11% above last year. In particular, the salary of HK$4.61m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.0m. This suggests that Richard Lam is paid more than the median for the industry. What's more, Richard Lam holds HK$909k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	HK$4.6m	HK$4.1m	86%
Other	HK$720k	HK$720k	14%
Total Compensation	HK$5.3m	HK$4.8m	100%

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. EverChina Int'l Holdings pays out 86% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

EverChina Int'l Holdings Company Limited's Growth

EverChina Int'l Holdings Company Limited has seen its earnings per share (EPS) increase by 25% a year over the past three years. It saw its revenue drop 2.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has EverChina Int'l Holdings Company Limited Been A Good Investment?

The return of -36% over three years would not have pleased EverChina Int'l Holdings Company Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

Whatever your view on compensation, you might want to check if insiders are buying or selling EverChina Int'l Holdings shares (free trial).

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.