Key Insights
- Fairwood Holdings will host its Annual General Meeting on 10th of September
- Salary of HK$2.88m is part of CEO Francis Lo's total remuneration
- The total compensation is 105% higher than the average for the industry
- Fairwood Holdings' EPS declined by 31% over the past three years while total shareholder loss over the past three years was 54%
Fairwood Holdings Limited (HKG:52) has not performed well recently and CEO Francis Lo will probably need to up their game. At the upcoming AGM on 10th of September, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.
See our latest analysis for Fairwood Holdings
How Does Total Compensation For Francis Lo Compare With Other Companies In The Industry?
At the time of writing, our data shows that Fairwood Holdings Limited has a market capitalization of HK$926m, and reported total annual CEO compensation of HK$4.2m for the year to March 2024. Notably, that's an increase of 17% over the year before. In particular, the salary of HK$2.88m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the Hong Kong Hospitality industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. Accordingly, our analysis reveals that Fairwood Holdings Limited pays Francis Lo north of the industry median.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | HK$2.9m | HK$2.5m | 68% |
| Other | HK$1.4m | HK$1.1m | 32% |
| Total Compensation | HK$4.2m | HK$3.6m | 100% |
Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. Fairwood Holdings 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.
Fairwood Holdings Limited's Growth
Over the last three years, Fairwood Holdings Limited has shrunk its earnings per share by 31% per year. Its revenue is up 3.7% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Fairwood Holdings Limited Been A Good Investment?
The return of -54% over three years would not have pleased Fairwood Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Fairwood Holdings we think you should know about.
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.