How Should Investors React To Polyfair Holdings' (HKG:8532) CEO Pay?

The CEO of Polyfair Holdings Limited (HKG:8532) is Stephen Yu, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Polyfair Holdings

How Does Total Compensation For Stephen Yu Compare With Other Companies In The Industry?

According to our data, Polyfair Holdings Limited has a market capitalization of HK$60m, and paid its CEO total annual compensation worth HK$2.2m over the year to March 2020. That's a modest increase of 3.8% on the prior year. We note that the salary portion, which stands at HK$2.02m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. This suggests that Polyfair Holdings remunerates its CEO largely in line with the industry average.

On an industry level, around 91% of total compensation represents salary and 8.8% is other remuneration. Our data reveals that Polyfair Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Polyfair Holdings Limited's Growth

Polyfair Holdings Limited has reduced its earnings per share by 2.6% a year over the last three years. It achieved revenue growth of 12% over the last year.

The lack of EPS growth is certainly unimpressive. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Polyfair Holdings Limited Been A Good Investment?

Given the total shareholder loss of 73% over three years, many shareholders in Polyfair Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Polyfair Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Polyfair Holdings that investors should be aware of in a dynamic business environment.

Important note: Polyfair Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

When trading Polyfair Holdings or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.