Shareholders Will Probably Hold Off On Increasing Vertical International Holdings Limited's (HKG:8375) CEO Compensation For The Time Being

In the past three years, the share price of Vertical International Holdings Limited (HKG:8375) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 31 May 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for Vertical International Holdings

Comparing Vertical International Holdings Limited's CEO Compensation With the industry

According to our data, Vertical International Holdings Limited has a market capitalization of HK$95m, and paid its CEO total annual compensation worth HK$1.9m over the year to December 2020. That is, the compensation was roughly the same as last year. We note that the salary of HK$1.08m makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. From this we gather that Henry Boon is paid around the median for CEOs in the industry. Moreover, Henry Boon also holds HK$59m worth of Vertical International Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	HK$1.1m	HK$1.1m	56%
Other	HK$837k	HK$800k	44%
Total Compensation	HK$1.9m	HK$1.9m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Vertical International Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. 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.

A Look at Vertical International Holdings Limited's Growth Numbers

Over the last three years, Vertical International Holdings Limited has shrunk its earnings per share by 13% per year. Its revenue is up 33% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Vertical International Holdings Limited Been A Good Investment?

With a total shareholder return of -56% over three years, Vertical International Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which makes us a bit uncomfortable) in Vertical International Holdings we think you should know about.

Switching gears from Vertical 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. 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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