Shareholders May Not Be So Generous With Polyfair Holdings Limited's (HKG:8532) CEO Compensation And Here's Why

The underwhelming share price performance of Polyfair Holdings Limited (HKG:8532) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 20 August 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

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$72m, and paid its CEO total annual compensation worth HK$2.2m over the year to March 2021. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at HK$2.04m 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$1.8m. This suggests that Polyfair Holdings remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	HK$2.0m	HK$2.0m	92%
Other	HK$186k	HK$186k	8%
Total Compensation	HK$2.2m	HK$2.2m	100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. There isn't a significant difference between Polyfair Holdings and the broader market, in terms of salary allocation in the overall compensation package. 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

Over the last three years, Polyfair Holdings Limited has shrunk its earnings per share by 36% per year. It achieved revenue growth of 41% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Polyfair Holdings Limited Been A Good Investment?

The return of -31% over three years would not have pleased Polyfair Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Polyfair Holdings (of which 3 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Polyfair 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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