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

The results at Henderson Land Development Company Limited (HKG:12) have been quite disappointing recently and CEO Martin Lee bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 01 June 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Henderson Land Development

Comparing Henderson Land Development Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Henderson Land Development Company Limited has a market capitalization of HK$174b, and reported total annual CEO compensation of HK$23m for the year to December 2020. That's a fairly small increase of 4.5% over the previous year. We note that the salary portion, which stands at HK$15.7m constitutes the majority of total compensation received by the CEO.

On comparing similar companies in the industry with market capitalizations above HK$62b, we found that the median total CEO compensation was HK$21m. This suggests that Henderson Land Development remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	HK$16m	HK$15m	68%
Other	HK$7.4m	HK$7.4m	32%
Total Compensation	HK$23m	HK$22m	100%

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Henderson Land Development is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Henderson Land Development Company Limited's Growth Numbers

Henderson Land Development Company Limited has reduced its earnings per share by 31% a year over the last three years. Its revenue is up 3.4% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation 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?

Given the total shareholder loss of 2.6% over three years, many shareholders in Henderson Land Development Company Limited are probably rather dissatisfied, to say the least. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Henderson Land Development that investors should be aware of in a dynamic business environment.

Important note: Henderson Land Development 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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