Why We Think Fulu Holdings Limited's (HKG:2101) CEO Compensation Is Not Excessive At All

Key Insights

• Fulu Holdings' Annual General Meeting to take place on 17th of May
• CEO Xi Fu's total compensation includes salary of CN¥622.0k
• The total compensation is 60% less than the average for the industry
• Over the past three years, Fulu Holdings' EPS fell by 15% and over the past three years, the total loss to shareholders 77%

Shareholders may be wondering what CEO Xi Fu plans to do to improve the less than great performance at Fulu Holdings Limited (HKG:2101) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 17th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Fulu Holdings

Comparing Fulu Holdings Limited's CEO Compensation With The Industry

According to our data, Fulu Holdings Limited has a market capitalization of HK$764m, and paid its CEO total annual compensation worth CN¥655k over the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of CN¥622.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Specialty Retail industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.6m. Accordingly, Fulu Holdings pays its CEO under the industry median. What's more, Xi Fu holds HK$292m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥622k	CN¥635k	95%
Other	CN¥33k	CN¥24k	5%
Total Compensation	CN¥655k	CN¥659k	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Fulu Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Fulu Holdings Limited's Growth

Over the last three years, Fulu Holdings Limited has shrunk its earnings per share by 15% per year. Its revenue is up 17% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Fulu Holdings Limited Been A Good Investment?

Few Fulu Holdings Limited shareholders would feel satisfied with the return of -77% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The loss to shareholders over the past three years is certainly concerning. The poor performance of the share price might have something to do with the lack of earnings growth. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned 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. That's why we did our research, and identified 3 warning signs for Fulu Holdings (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: Fulu Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.