Why Shareholders Are Concerned About the Rising CEO Compensation at JS Global Lifestyle Company Limited (HKG:1691)

JS Global Lifestyle Company Limited has not been doing well lately, leaving many shareholders disappointed. As they look forward to the upcoming annual meeting on May 22, they’ll be eager to hear how the company plans to improve its performance. This meeting is also a chance for shareholders to voice their opinions and vote on key issues, like executive pay, which could impact the company’s future.

As of now, JS Global has a market cap of HK$6.8 billion. CEO CJ Xuning Wang received a total compensation of US$67 million for the year ending December 2024—a staggering 68% increase from the previous year. This amount is significantly higher than the industry average for similar sized companies in the Hong Kong Consumer Durables sector, where median CEO pay is only US$186,000. Interestingly, Wang’s base salary is relatively modest at US$1.1 million. This means that a large portion of the pay comes from other benefits, which may be tied closely to the company’s performance.

Comparatively, the broader market shows that around 81% of CEO compensation is typically salary, while only 19% comes from bonuses or other perks. JS Global has opted for a different approach, favoring performance-related pay. However, with earnings per share (EPS) declining by 76% annually over the past three years, this strategy raises concerns. Despite a recent 12% growth in revenue, it’s not enough to overshadow the EPS decline. Many shareholders might feel that the high CEO pay doesn’t align with the company’s disappointing results.

Over the past three years, investors have faced a return of -75%. Such low returns might make it hard for shareholders to accept high executive pay. Moving forward, shareholders may want to ensure that future compensation reflects actual company performance.

In summary, JS Global is leaning towards rewarding its CEO through non-salary benefits, which is uncommon in the industry. Given the company’s struggles, it’s unlikely that many shareholders will support significant pay increases. This upcoming AGM will be crucial for shareholders to discuss management strategies and express their views on executive compensation. Moreover, it’s essential for investors to also monitor other factors within the business to make informed decisions.

To aid investors in their research, it’s worth noting that approximately 52% of companies in similar sectors are restructuring or reevaluating their CEO pay structures in light of shareholder feedback. For those considering investments in well-managed firms, reviewing the findings from trusted sources, such as the Harvard Business Review, could provide additional insights.

Thus, while keeping an eye on CEO compensation, investors should analyze the overall health of the company to make the best choices moving forward.

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