Should Shareholders Reconsider Wah Sun Handbags International Holdings Limited's (HKG:2683) CEO Compensation Package?

Wah Sun Handbags International Holdings Limited (HKG:2683) has not performed well recently and CEO Hing Ming Ma will probably need to up their game. At the upcoming AGM on 06 September 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Wah Sun Handbags International Holdings

Comparing Wah Sun Handbags International Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Wah Sun Handbags International Holdings Limited has a market capitalization of HK$123m, and reported total annual CEO compensation of HK$2.1m for the year to March 2021. That's a slight decrease of 4.1% on the prior year. In particular, the salary of HK$2.12m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.3m. From this we gather that Hing Ming Ma is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$2.1m	HK$2.2m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$2.1m	HK$2.2m	100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. Wah Sun Handbags International Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Wah Sun Handbags International Holdings Limited's Growth

Over the last three years, Wah Sun Handbags International Holdings Limited has shrunk its earnings per share by 54% per year. Its revenue is down 47% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Wah Sun Handbags International Holdings Limited Been A Good Investment?

Few Wah Sun Handbags International Holdings Limited shareholders would feel satisfied with the return of -53% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Wah Sun Handbags International Holdings pays its CEO a majority of compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which doesn't sit too well with us) in Wah Sun Handbags International Holdings we think you should know about.

Switching gears from Wah Sun Handbags International 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.
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