How Should Investors Feel About Pacific Textiles Holdings' (HKG:1382) CEO Remuneration?

This article will reflect on the compensation paid to Wai Loi Wan who has served as CEO of Pacific Textiles Holdings Limited (HKG:1382) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Pacific Textiles Holdings.

Check out our latest analysis for Pacific Textiles Holdings

How Does Total Compensation For Wai Loi Wan Compare With Other Companies In The Industry?

According to our data, Pacific Textiles Holdings Limited has a market capitalization of HK$7.5b, and paid its CEO total annual compensation worth HK$23m over the year to March 2020. We note that's a small decrease of 5.8% on last year. We note that the salary portion, which stands at HK$21.8m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$3.1b to HK$12b, we found that the median CEO total compensation was HK$2.9m. This suggests that Wai Loi Wan is paid more than the median for the industry. Furthermore, Wai Loi Wan directly owns HK$58m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 93% of total compensation represents salary and 7.4% is other remuneration. Our data reveals that Pacific Textiles 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.

A Look at Pacific Textiles Holdings Limited's Growth Numbers

Pacific Textiles Holdings Limited has reduced its earnings per share by 7.5% a year over the last three years. It saw its revenue drop 15% over the last year.

The decline in EPS is a bit concerning. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Pacific Textiles Holdings Limited Been A Good Investment?

With a three year total loss of 19% for the shareholders, Pacific Textiles Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Pacific Textiles Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Pacific Textiles Holdings that investors should be aware of in a dynamic business environment.

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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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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