Most Shareholders Will Probably Agree With Applied Development Holdings Limited's (HKG:519) CEO Compensation

Performance at Applied Development Holdings Limited (HKG:519) has been rather uninspiring recently and shareholders may be wondering how CEO Zhanming Wu plans to fix this. At the next AGM coming up on 15 December 2022, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Applied Development Holdings

Comparing Applied Development Holdings Limited's CEO Compensation With The Industry

According to our data, Applied Development Holdings Limited has a market capitalization of HK$213m, and paid its CEO total annual compensation worth HK$1.3m over the year to June 2022. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$1.04m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. Accordingly, Applied Development Holdings pays its CEO under the industry median. Furthermore, Zhanming Wu directly owns HK$24m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	HK$1.0m	HK$1.0m	81%
Other	HK$240k	HK$240k	19%
Total Compensation	HK$1.3m	HK$1.3m	100%

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. According to our research, Applied Development Holdings has allocated a higher percentage of pay to salary in comparison to the wider 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 Applied Development Holdings Limited's Growth Numbers

Over the past three years, Applied Development Holdings Limited has seen its earnings per share (EPS) grow by 18% per year. In the last year, its revenue is down 94%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Applied Development Holdings Limited Been A Good Investment?

The return of -59% over three years would not have pleased Applied Development Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Applied Development Holdings you should be aware of, and 1 of them is significant.

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.