Artini soars 51pc despite bosses' pay rise

PUBLISHED : Thursday, 16 August, 2012, 12:00am
UPDATED : Thursday, 16 August, 2012, 10:53am

Shares in beleaguered fashion jewellery distributor Artini China jumped 51 per cent after chief Tse Chiu-kwan, who was detained by police in Shenzhen last month on suspicion of a drug-related offence, was redesignated non-executive chairman.

But investors, in their enthusiasm, may have overlooked the fact that the loss-making company's fixed annual remuneration to Tse and his wife, who has been appointed the new chief executive, has been raised by 29 per cent to HK$16.4 million from HK$12.7 million. The cost increase is not good news for shareholders and management as the firm struggles to turn itself around. Its net losses amounted to HK$143.3 million in the year to March and HK$176.6 million in the previous financial year.

It also stands in sharp contrast to the firm's stated efforts to trim expenses, as spelled out in its annual results announcement in June: "The group continued to adopt stringent cost control by consolidating internal resources, streamlining staff structure and cutting costs."

Although Tse will no longer be involved in Artini's day-to-day operations as a non-executive director, he will be entitled to a monthly salary that comes to HK$5.85 million a year, Artini said in a filing to the local bourse. He is also being given a monthly housing allowance of HK$40,800, based on terms of a three-year service contract.

His remuneration package compares to the HK$1.8 million paid to his wife, Yip Ying-kam in the year to March 31. She was a non-executive director before February 23.

Asked why Tse's non-executive role deserves such a high salary, a spokesman for the firm said it was to recognise Tse's significant contribution to the company over the years.

For her new role, Yip is entitled to a monthly salary of HK$680,000 and a housing allowance of HK$102,300.

Yip, who co-founded Artini with Tse in 1992, was appointed executive director on February 23, when Tse took a leave of absence due to poor health. He "fully recovered" and resumed work on May 11, the firm said at the time, adding Yip was appointed chief operating officer to boost management. The pair then became the firm's only executive directors. Tse owns 53.18 per cent of the firm while Yip has a 6.79 per cent stake.

Tse was released on bail by Shenzhen police due to insufficient evidence against him.

Artini's shares closed at 21.2 HK cents on a hefty turnover of HK$34 million yesterday, after a 38.6 per cent jump on Tuesday, which the board said it could not explain.