Shareholders Will Probably Hold Off On Increasing Lum Chang Holdings Limited's (SGX:L19) CEO Compensation For The Time Being

Key Insights

• Lum Chang Holdings to hold its Annual General Meeting on 24th of October
• Salary of S$707.4k is part of CEO David Lum's total remuneration
• The overall pay is 155% above the industry average
• Lum Chang Holdings' EPS grew by 36% over the past three years while total shareholder loss over the past three years was 9.9%

In the past three years, shareholders of Lum Chang Holdings Limited (SGX:L19) 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. The AGM coming up on the 24th of October could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Lum Chang Holdings

How Does Total Compensation For David Lum Compare With Other Companies In The Industry?

Our data indicates that Lum Chang Holdings Limited has a market capitalization of S$114m, and total annual CEO compensation was reported as S$1.2m for the year to June 2024. We note that's an increase of 51% above last year. In particular, the salary of S$707.4k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the Singapore Construction industry with market capitalizations under S$263m, the reported median total CEO compensation was S$487k. This suggests that David Lum is paid more than the median for the industry. Moreover, David Lum also holds S$6.7m worth of Lum Chang Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	S$707k	S$709k	57%
Other	S$534k	S$115k	43%
Total Compensation	S$1.2m	S$824k	100%

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. Lum Chang Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Lum Chang Holdings Limited's Growth

Lum Chang Holdings Limited has seen its earnings per share (EPS) increase by 36% a year over the past three years. It achieved revenue growth of 27% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Lum Chang Holdings Limited Been A Good Investment?

Since shareholders would have lost about 9.9% over three years, some Lum Chang Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Lum Chang Holdings (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Lum Chang Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.