Shareholders May Not Be So Generous With High Fashion International Limited's (HKG:608) CEO Compensation And Here's Why

Key Insights

• High Fashion International will host its Annual General Meeting on 3rd of June
• CEO Will Lam's total compensation includes salary of HK$4.20m
• Total compensation is 335% above industry average
• High Fashion International's total shareholder return over the past three years was 25% while its EPS was down 3.0% over the past three years

Despite High Fashion International Limited's (HKG:608) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 3rd of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for High Fashion International

Comparing High Fashion International Limited's CEO Compensation With The Industry

According to our data, High Fashion International Limited has a market capitalization of HK$458m, and paid its CEO total annual compensation worth HK$8.4m over the year to December 2023. That's a notable increase of 9.6% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$4.2m.

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$1.9m. Accordingly, our analysis reveals that High Fashion International Limited pays Will Lam north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$4.2m	HK$4.0m	50%
Other	HK$4.2m	HK$3.7m	50%
Total Compensation	HK$8.4m	HK$7.7m	100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. It's interesting to note that High Fashion International allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at High Fashion International Limited's Growth Numbers

Over the last three years, High Fashion International Limited has shrunk its earnings per share by 3.0% per year. Its revenue is down 5.9% over the previous year.

The lack of EPS growth is certainly uninspiring. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has High Fashion International Limited Been A Good Investment?

With a total shareholder return of 25% over three years, High Fashion International Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 2 warning signs for High Fashion International that investors should be aware of in a dynamic business environment.

Switching gears from High Fashion International, 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.