Public Financial Holdings Limited's (HKG:626) CEO Might Not Expect Shareholders To Be So Generous This Year

The results at Public Financial Holdings Limited (HKG:626) have been quite disappointing recently and CEO Yoke Kong Tan bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22 April 2021. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Public Financial Holdings

Comparing Public Financial Holdings Limited's CEO Compensation With the industry

Our data indicates that Public Financial Holdings Limited has a market capitalization of HK$2.4b, and total annual CEO compensation was reported as HK$4.1m for the year to December 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$2.63m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was HK$3.9m. This suggests that Public Financial Holdings remunerates its CEO largely in line with the industry average. Furthermore, Yoke Kong Tan directly owns HK$1.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$2.6m	HK$2.6m	63%
Other	HK$1.5m	HK$1.6m	37%
Total Compensation	HK$4.1m	HK$4.1m	100%

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. Although there is a difference in how total compensation is set, Public Financial Holdings 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.

A Look at Public Financial Holdings Limited's Growth Numbers

Over the last three years, Public Financial Holdings Limited has shrunk its earnings per share by 7.6% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Public Financial Holdings Limited Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in Public Financial Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Public Financial Holdings that investors should think about before committing capital to this stock.

Switching gears from Public Financial Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. 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.
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