It Looks Like Luxey International (Holdings) Limited's (HKG:8041) CEO May Expect Their Salary To Be Put Under The Microscope

Shareholders will probably not be too impressed with the underwhelming results at Luxey International (Holdings) Limited (HKG:8041) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 12 December 2022. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Our analysis indicates that 8041 is potentially overvalued!

How Does Total Compensation For Hiu Kwan Chan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Luxey International (Holdings) Limited has a market capitalization of HK$242m, and reported total annual CEO compensation of HK$1.4m for the year to June 2022. We note that's an increase of 15% above last year. In particular, the salary of HK$1.19m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. From this we gather that Hiu Kwan Chan is paid around the median for CEOs in the industry.

Component	2022	2021	Proportion (2022)
Salary	HK$1.2m	HK$1.0m	84%
Other	HK$224k	HK$208k	16%
Total Compensation	HK$1.4m	HK$1.2m	100%

On an industry level, roughly 93% of total compensation represents salary and 7% is other remuneration. Luxey International (Holdings) is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Luxey International (Holdings) Limited's Growth Numbers

Luxey International (Holdings) Limited has reduced its earnings per share by 25% a year over the last three years. It saw its revenue drop 8.8% over the last 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Luxey International (Holdings) Limited Been A Good Investment?

Few Luxey International (Holdings) Limited shareholders would feel satisfied with the return of -44% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Luxey International (Holdings) (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Luxey 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.