Key Insights

• Lai Sun Development's Annual General Meeting to take place on 13th of December
• CEO Julius Lau's total compensation includes salary of HK$4.76m
• The total compensation is 160% higher than the average for the industry
• Lai Sun Development's three-year loss to shareholders was 81% while its EPS was down 3.4% over the past three years

Shareholders of Lai Sun Development Company Limited (HKG:488) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 13th of December and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out 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$1.1b, and reported total annual CEO compensation of HK$4.8m for the year to July 2024. This was the same amount the CEO received in the prior year. Notably, the salary of HK$4.8m is the entirety of the CEO compensation.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. This suggests that Julius Lau is paid more than the median for the industry. Furthermore, Julius Lau directly owns HK$439k worth of shares in the company.

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Speaking on a company level, Lai Sun Development prefers to tread along a traditional path, disbursing all compensation through a salary. 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

Over the last three years, Lai Sun Development Company Limited has shrunk its earnings per share by 3.4% per year. In the last year, its revenue is up 22%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Lai Sun Development Company Limited Been A Good Investment?

Few Lai Sun Development Company Limited shareholders would feel satisfied with the return of -81% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Lai Sun Development rewards its CEO solely through a salary, ignoring non-salary benefits completely. The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. We did our research and identified 3 warning signs (and 2 which are potentially serious) in Lai Sun Development we think you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.