Key Insights

• Crocodile Garments will host its Annual General Meeting on 13th of December
• Salary of HK$3.84m is part of CEO Vanessa Lam's total remuneration
• The overall pay is 72% above the industry average
• Crocodile Garments' EPS grew by 30% over the past three years while total shareholder loss over the past three years was 50%

In the past three years, the share price of Crocodile Garments Limited (HKG:122) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 13th of December. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Crocodile Garments

Comparing Crocodile Garments Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Crocodile Garments Limited has a market capitalization of HK$196m, and reported total annual CEO compensation of HK$4.2m for the year to July 2023. We note that's an increase of 20% above last year. We note that the salary portion, which stands at HK$3.84m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.4m. Accordingly, our analysis reveals that Crocodile Garments Limited pays Vanessa Lam north of the industry median. Moreover, Vanessa Lam also holds HK$3.7m worth of Crocodile Garments 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. Although there is a difference in how total compensation is set, Crocodile Garments more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Crocodile Garments Limited's Growth

Crocodile Garments Limited's earnings per share (EPS) grew 30% per year over the last three years. It saw its revenue drop 16% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Crocodile Garments Limited Been A Good Investment?

Few Crocodile Garments Limited shareholders would feel satisfied with the return of -50% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Crocodile Garments (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.