We Think Lai Sun Garment (International) Limited's (HKG:191) CEO Compensation Package Needs To Be Put Under A Microscope

Lai Sun Garment (International) Limited (HKG:191) has not performed well recently and CEO Chai Tuck Yip will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 16 December 2022. 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 Lai Sun Garment (International)

Comparing Lai Sun Garment (International) Limited's CEO Compensation With The Industry

Our data indicates that Lai Sun Garment (International) Limited has a market capitalization of HK$1.0b, and total annual CEO compensation was reported as HK$10m for the year to July 2022. We note that's an increase of 12% above last year. Notably, the salary which is HK$10.2m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. This suggests that Chai Tuck Yip is paid more than the median for the industry.

Component	2022	2021	Proportion (2022)
Salary	HK$10m	HK$9.1m	98%
Other	HK$234k	HK$234k	2%
Total Compensation	HK$10m	HK$9.4m	100%

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Lai Sun Garment (International) has gone down a largely traditional route, paying Chai Tuck Yip a high salary, giving it preference over 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.

Lai Sun Garment (International) Limited's Growth

Lai Sun Garment (International) Limited has reduced its earnings per share by 40% a year over the last three years. Its revenue is down 13% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-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 Lai Sun Garment (International) Limited Been A Good Investment?

Few Lai Sun Garment (International) Limited shareholders would feel satisfied with the return of -77% over three years. 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. 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.

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.

Switching gears from Lai Sun Garment (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.