We Think The Compensation For AB Builders Group Limited's (HKG:1615) CEO Looks About Right

Key Insights

• AB Builders Group to hold its Annual General Meeting on 20th of June
• Total pay for CEO Athena Lao includes MO$853.0k salary
• Total compensation is 52% below industry average
• Over the past three years, AB Builders Group's EPS grew by 17% and over the past three years, the total loss to shareholders 29%

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The performance at AB Builders Group Limited (HKG:1615) has been rather lacklustre of late and shareholders may be wondering what CEO Athena Lao is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 20th of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for AB Builders Group

Comparing AB Builders Group Limited's CEO Compensation With The Industry

Our data indicates that AB Builders Group Limited has a market capitalization of HK$121m, and total annual CEO compensation was reported as MO$1.1m for the year to December 2024. That's a notable decrease of 13% on last year. In particular, the salary of MO$853.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Construction industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was MO$2.3m. In other words, AB Builders Group pays its CEO lower than the industry median.

Component	2024	2023	Proportion (2024)
Salary	MO$853k	MO$1.3m	77%
Other	MO$251k	MO$1.0k	23%
Total Compensation	MO$1.1m	MO$1.3m	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Our data reveals that AB Builders Group allocates salary more or less in line with the wider market. 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.

AB Builders Group Limited's Growth

AB Builders Group Limited's earnings per share (EPS) grew 17% per year over the last three years. It achieved revenue growth of 29% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 AB Builders Group Limited Been A Good Investment?

Since shareholders would have lost about 29% over three years, some AB Builders Group Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key focus for the board and management will be how to align the share price with fundamentals. 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.

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 identified 2 warning signs for AB Builders Group (1 is significant!) that you should be aware of before investing here.

Important note: AB Builders Group 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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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.