Here's Why Shareholders May Want To Be Cautious With Increasing Hong Kong Ferry (Holdings) Company Limited's (HKG:50) CEO Pay Packet

Key Insights

• Hong Kong Ferry (Holdings)'s Annual General Meeting to take place on 31st of May
• Salary of HK$5.10m is part of CEO Gabriel Lee's total remuneration
• Total compensation is 65% above industry average
• Hong Kong Ferry (Holdings)'s EPS grew by 93% over the past three years while total shareholder loss over the past three years was 2.8%

In the past three years, shareholders of Hong Kong Ferry (Holdings) Company Limited (HKG:50) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 31st of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Hong Kong Ferry (Holdings)

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

At the time of writing, our data shows that Hong Kong Ferry (Holdings) Company Limited has a market capitalization of HK$1.6b, and reported total annual CEO compensation of HK$5.5m for the year to December 2023. That's a modest increase of 4.6% on the prior year. Notably, the salary which is HK$5.10m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Real Estate industry with market capitalizations ranging from HK$781m to HK$3.1b, the reported median CEO total compensation was HK$3.3m. This suggests that Gabriel Lee is paid more than the median for the industry. What's more, Gabriel Lee holds HK$797k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	HK$5.1m	HK$5.0m	93%
Other	HK$403k	HK$250k	7%
Total Compensation	HK$5.5m	HK$5.3m	100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Hong Kong Ferry (Holdings) pays out 93% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Hong Kong Ferry (Holdings) Company Limited's Growth

Over the past three years, Hong Kong Ferry (Holdings) Company Limited has seen its earnings per share (EPS) grow by 93% per year. It achieved revenue growth of 33% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Hong Kong Ferry (Holdings) Company Limited Been A Good Investment?

With a three year total loss of 2.8% for the shareholders, Hong Kong Ferry (Holdings) Company Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Hong Kong Ferry (Holdings) that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.