Key Insights

• Top Form International to hold its Annual General Meeting on 28th of November
• CEO Kevin Wong's total compensation includes salary of HK$3.11m
• The overall pay is 119% above the industry average
• Top Form International's EPS declined by 57% over the past three years while total shareholder loss over the past three years was 41%

Shareholders will probably not be too impressed with the underwhelming results at Top Form International Limited (HKG:333) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28th of November. 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.

Comparing Top Form International Limited's CEO Compensation With The Industry

Our data indicates that Top Form International Limited has a market capitalization of HK$92m, and total annual CEO compensation was reported as HK$4.2m for the year to June 2024. We note that's an increase of 33% above last year. In particular, the salary of HK$3.11m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Luxury industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. Accordingly, our analysis reveals that Top Form International Limited pays Kevin Wong north of the industry median.

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Top Form International sets aside a smaller share of compensation for salary, in comparison to the overall 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 Top Form International Limited's Growth Numbers

Over the last three years, Top Form International Limited has shrunk its earnings per share by 57% per year. In the last year, its revenue is up 12%.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Top Form International Limited Been A Good Investment?

Few Top Form International Limited shareholders would feel satisfied with the return of -41% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

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 Top Form International that you should be aware of before investing.

Important note: Top Form 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.