Should Shareholders Reconsider Pacific Textiles Holdings Limited's (HKG:1382) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Pacific Textiles Holdings Limited (HKG:1382) recently. At the upcoming AGM on 12 August 2021, shareholders can hear from the board including their plans for turning around performance. 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.

View our latest analysis for Pacific Textiles Holdings

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

Our data indicates that Pacific Textiles Holdings Limited has a market capitalization of HK$6.1b, and total annual CEO compensation was reported as HK$23m for the year to March 2021. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at HK$21.7m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was HK$5.6m. This suggests that Wai Loi Wan is paid more than the median for the industry. Moreover, Wai Loi Wan also holds HK$49m worth of Pacific Textiles Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$22m	HK$22m	94%
Other	HK$1.5m	HK$1.5m	6%
Total Compensation	HK$23m	HK$23m	100%

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. Pacific Textiles Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 saw earnings per share stay pretty flat over the last three years. In the last year, its revenue is down 1.7%.

Its a bit disappointing to see that the company has failed to grow its EPS. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Pacific Textiles Holdings Limited Been A Good Investment?

Given the total shareholder loss of 18% over three years, many shareholders in Pacific Textiles 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Pacific Textiles Holdings that investors should think about before committing capital to this stock.

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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