Here's Why It's Unlikely That Topsports International Holdings Limited's (HKG:6110) CEO Will See A Pay Rise This Year

Key Insights

• Topsports International Holdings' Annual General Meeting to take place on 19th of July
• CEO Wu Yu's total compensation includes salary of CN¥2.51m
• The total compensation is 131% higher than the average for the industry
• Topsports International Holdings' three-year loss to shareholders was 58% while its EPS was down 7.2% over the past three years

The results at Topsports International Holdings Limited (HKG:6110) have been quite disappointing recently and CEO Wu Yu bears some responsibility for this. At the upcoming AGM on 19th of July, shareholders can hear from the board including their plans for turning around performance. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Topsports International Holdings

How Does Total Compensation For Wu Yu Compare With Other Companies In The Industry?

At the time of writing, our data shows that Topsports International Holdings Limited has a market capitalization of HK$25b, and reported total annual CEO compensation of CN¥6.9m for the year to February 2024. That's just a smallish increase of 3.3% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥2.5m.

For comparison, other companies in the Hong Kong Specialty Retail industry with market capitalizations ranging between HK$16b and HK$50b had a median total CEO compensation of CN¥3.0m. Hence, we can conclude that Wu Yu is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	CN¥2.5m	CN¥2.5m	36%
Other	CN¥4.4m	CN¥4.2m	64%
Total Compensation	CN¥6.9m	CN¥6.7m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. In Topsports International Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Topsports International Holdings Limited's Growth Numbers

Over the last three years, Topsports International Holdings Limited has shrunk its earnings per share by 7.2% per year. In the last year, its revenue is up 6.9%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Topsports International Holdings Limited Been A Good Investment?

Few Topsports International Holdings Limited shareholders would feel satisfied with the return of -58% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Topsports International Holdings that you should be aware of before investing.

Switching gears from Topsports 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com