Here's What We Learned About The CEO Pay At Lai Sun Garment (International) Limited (HKG:191)

Chai Tuck Yip became the CEO of Lai Sun Garment (International) Limited (HKG:191) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Lai Sun Garment (International) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Lai Sun Garment (International)

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

At the time of writing, our data shows that Lai Sun Garment (International) Limited has a market capitalization of HK$2.4b, and reported total annual CEO compensation of HK$10.0m for the year to July 2020. That is, the compensation was roughly the same as last year. In particular, the salary of HK$9.74m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of HK$3.6m. Accordingly, our analysis reveals that Lai Sun Garment (International) Limited pays Chai Tuck Yip north of the industry median.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Lai Sun Garment (International) pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Lai Sun Garment (International) Limited's Growth

Over the last three years, Lai Sun Garment (International) Limited has shrunk its earnings per share by 46% per year. In the last year, its revenue is down 24%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Lai Sun Garment (International) Limited Been A Good Investment?

Since shareholders would have lost about 56% over three years, some Lai Sun Garment (International) Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Lai Sun Garment (International) pays its CEO a majority of compensation through a salary. As we noted earlier, Lai Sun Garment (International) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 are significant!) that you should be aware of before investing here.

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This article by Simply Wall St is general in nature. 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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