Shareholders May Be Wary Of Increasing Mainland Headwear Holdings Limited's (HKG:1100) CEO Compensation Package

Key Insights

• Mainland Headwear Holdings will host its Annual General Meeting on 23rd of May
• Salary of HK$1.82m is part of CEO Pauline Ngan's total remuneration
• The total compensation is 149% higher than the average for the industry
• Mainland Headwear Holdings' EPS declined by 24% over the past three years while total shareholder loss over the past three years was 10%

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The results at Mainland Headwear Holdings Limited (HKG:1100) have been quite disappointing recently and CEO Pauline Ngan bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 23rd of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Mainland Headwear Holdings

Comparing Mainland Headwear Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Mainland Headwear Holdings Limited has a market capitalization of HK$622m, and reported total annual CEO compensation of HK$5.4m for the year to December 2024. We note that's a decrease of 16% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$1.8m.

On comparing similar-sized companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. This suggests that Pauline Ngan is paid more than the median for the industry. Furthermore, Pauline Ngan directly owns HK$58m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$1.8m	HK$1.8m	34%
Other	HK$3.6m	HK$4.6m	66%
Total Compensation	HK$5.4m	HK$6.4m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Mainland Headwear Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Mainland Headwear Holdings Limited's Growth

Mainland Headwear Holdings Limited has reduced its earnings per share by 24% a year over the last three years. In the last year, its revenue is up 3.9%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Mainland Headwear Holdings Limited Been A Good Investment?

Given the total shareholder loss of 10% over three years, many shareholders in Mainland Headwear Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Mainland Headwear Holdings that investors should be aware of in a dynamic business environment.

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. 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.