Does Lai Sun Development's (HKG:488) CEO Salary Compare Well With Industry Peers?

Julius Lau became the CEO of Lai Sun Development Company Limited (HKG:488) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lai Sun Development.

See our latest analysis for Lai Sun Development

Comparing Lai Sun Development Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Lai Sun Development Company Limited has a market capitalization of HK$3.3b, and reported total annual CEO compensation of HK$5.3m for the year to July 2020. That is, the compensation was roughly the same as last year. In particular, the salary of HK$5.05m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was HK$3.7m. Accordingly, our analysis reveals that Lai Sun Development Company Limited pays Julius Lau north of the industry median. What's more, Julius Lau holds HK$1.4m worth of shares in the company in their own name.

Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. Lai Sun Development pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

A Look at Lai Sun Development Company Limited's Growth Numbers

Lai Sun Development Company Limited has reduced its earnings per share by 42% a year over the last three years. In the last year, its revenue is down 20%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Lai Sun Development Company Limited Been A Good Investment?

Given the total shareholder loss of 61% over three years, many shareholders in Lai Sun 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.

To Conclude...

Julius receives almost all of their compensation through a salary. As we noted earlier, Lai Sun Development pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Lai Sun Development (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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. 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.
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