Key Insights

• Luk Fook Holdings (International)'s Annual General Meeting to take place on 15th of August
• Total pay for CEO Wai Sheung Wong includes HK$5.61m salary
• The overall pay is 1,099% above the industry average
• Luk Fook Holdings (International)'s three-year loss to shareholders was 25% while its EPS grew by 20% over the past three years

Shareholders of Luk Fook Holdings (International) Limited (HKG:590) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 15th of August. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Comparing Luk Fook Holdings (International) Limited's CEO Compensation With The Industry

Our data indicates that Luk Fook Holdings (International) Limited has a market capitalization of HK$8.9b, and total annual CEO compensation was reported as HK$38m for the year to March 2024. We note that's a decrease of 19% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$5.6m.

In comparison with other companies in the Hong Kong Specialty Retail industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was HK$3.2m. This suggests that Wai Sheung Wong is paid more than the median for the industry. Moreover, Wai Sheung Wong also holds HK$158m worth of Luk Fook Holdings (International) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Luk Fook Holdings (International) pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Luk Fook Holdings (International) Limited's Growth

Luk Fook Holdings (International) Limited's earnings per share (EPS) grew 20% per year over the last three years. In the last year, its revenue is up 28%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Luk Fook Holdings (International) Limited Been A Good Investment?

Since shareholders would have lost about 25% over three years, some Luk Fook Holdings (International) Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Luk Fook Holdings (International) that investors should think about before committing capital to this stock.

Important note: Luk Fook Holdings (International) 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.