Key Insights

• Esprit Holdings to hold its Annual General Meeting on 19th of June
• Total pay for CEO William Pak includes HK$1.82m salary
• The overall pay is comparable to the industry average
• Esprit Holdings' EPS declined by 27% over the past three years while total shareholder loss over the past three years was 77%

Esprit Holdings Limited (HKG:330) has not performed well recently and CEO William Pak 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 19th of June. 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.

How Does Total Compensation For William Pak Compare With Other Companies In The Industry?

According to our data, Esprit Holdings Limited has a market capitalization of HK$507m, and paid its CEO total annual compensation worth HK$1.8m over the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$1.82m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Specialty Retail industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.7m. From this we gather that William Pak is paid around the median for CEOs in the industry.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Investors will find it interesting that Esprit Holdings pays the bulk of its rewards through a traditional salary, instead of 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.

A Look at Esprit Holdings Limited's Growth Numbers

Over the last three years, Esprit Holdings Limited has shrunk its earnings per share by 27% per year. Its revenue is down 16% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Esprit Holdings Limited Been A Good Investment?

Few Esprit Holdings Limited shareholders would feel satisfied with the return of -77% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Esprit Holdings pays its CEO a majority of compensation through a salary. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Esprit Holdings you should be aware of, and 2 of them don't sit too well with us.

Important note: Esprit 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.