The underwhelming performance at Nova LifeStyle, Inc. (NASDAQ:NVFY) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 28 May 2021. We think most shareholders will probably pass the CEO compensation, based on what we gathered.
Comparing Nova LifeStyle, Inc.’s CEO Compensation With the industry
According to our data, Nova LifeStyle, Inc. has a market capitalization of US$16m, and paid its CEO total annual compensation worth US$100k over the year to December 2020. This was the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth US$100k.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$378k. This suggests that Tawny Lam is paid below the industry median. Furthermore, Tawny Lam directly owns US$167k worth of shares in the company.
On an industry level, roughly 25% of total compensation represents salary and 75% is other remuneration. On a company level, Nova LifeStyle prefers to reward its CEO through a salary, opting not to pay Tawny Lam through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Nova LifeStyle, Inc.’s Growth
Nova LifeStyle, Inc. has reduced its earnings per share by 124% a year over the last three years. In the last year, its revenue is down 19%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Nova LifeStyle, Inc. Been A Good Investment?
With a total shareholder return of -70% over three years, Nova LifeStyle, Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
Nova LifeStyle pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there’s little to no chance of them being in favor of a CEO pay raise. 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 makes us a bit uncomfortable) in Nova LifeStyle 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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