Key Insights

• Vertical International Holdings to hold its Annual General Meeting on 17th of May
• Total pay for CEO Henry Boon includes HK$1.12m salary
• The overall pay is comparable to the industry average
• Vertical International Holdings' three-year loss to shareholders was 53% while its EPS was down 94% over the past three years

The results at Vertical International Holdings Limited (HKG:8375) have been quite disappointing recently and CEO Henry Boon bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 17th of May. 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. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Henry Boon Compare With Other Companies In The Industry?

According to our data, Vertical International Holdings Limited has a market capitalization of HK$49m, and paid its CEO total annual compensation worth HK$2.4m over the year to December 2023. Notably, that's an increase of 8.9% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$1.1m.

For comparison, other companies in the Hong Kong Electronic industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.5m. This suggests that Vertical International Holdings remunerates its CEO largely in line with the industry average. What's more, Henry Boon holds HK$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. It's interesting to note that Vertical International Holdings allocates a smaller portion of compensation to salary 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.

Vertical International Holdings Limited's Growth

Vertical International Holdings Limited has reduced its earnings per share by 94% a year over the last three years. In the last year, its revenue is down 2.4%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Vertical International Holdings Limited Been A Good Investment?

With a total shareholder return of -53% over three years, Vertical International Holdings Limited shareholders would by and large be disappointed. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Vertical International Holdings you should be aware of, and 2 of them can't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.