Lai Sun Garment (International) Limited's (HKG:191) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Lai Sun Garment (International) will host its Annual General Meeting on 15th of December
• Salary of HK$9.36m is part of CEO Chai Tuck Yip's total remuneration
• Total compensation is 350% above industry average
• Lai Sun Garment (International)'s three-year loss to shareholders was 80% while its EPS grew by 37% over the past three years

Shareholders of Lai Sun Garment (International) Limited (HKG:191) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 15th of December could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Lai Sun Garment (International)

How Does Total Compensation For Chai Tuck Yip Compare With Other Companies In The Industry?

According to our data, Lai Sun Garment (International) Limited has a market capitalization of HK$804m, and paid its CEO total annual compensation worth HK$9.6m over the year to July 2023. We note that's a decrease of 8.2% compared to last year. In particular, the salary of HK$9.36m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. This suggests that Chai Tuck Yip is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$9.4m	HK$10m	98%
Other	HK$234k	HK$234k	2%
Total Compensation	HK$9.6m	HK$10m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Investors will find it interesting that Lai Sun Garment (International) pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Lai Sun Garment (International) Limited's Growth

Lai Sun Garment (International) Limited has seen its earnings per share (EPS) increase by 37% a year over the past three years. It saw its revenue drop 7.3% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Lai Sun Garment (International) Limited Been A Good Investment?

With a total shareholder return of -80% over three years, Lai Sun Garment (International) Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Lai Sun Garment (International) pays its CEO a majority of compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Lai Sun Garment (International) (2 don't sit too well with us!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.