We Think Pacific Textiles Holdings Limited's (HKG:1382) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Pacific Textiles Holdings to hold its Annual General Meeting on 15th of August
• Total pay for CEO Masaru Okutomi includes HK$3.67m salary
• The overall pay is 45% above the industry average
• Pacific Textiles Holdings' EPS declined by 38% over the past three years while total shareholder loss over the past three years was 52%

The results at Pacific Textiles Holdings Limited (HKG:1382) have been quite disappointing recently and CEO Masaru Okutomi 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 15th of August. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. 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

Comparing Pacific Textiles Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Pacific Textiles Holdings Limited has a market capitalization of HK$2.3b, and reported total annual CEO compensation of HK$4.7m for the year to March 2024. Notably, that's an increase of 8.4% over the year before. We note that the salary portion, which stands at HK$3.67m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the Hong Kong Luxury industry with market capitalizations between HK$779m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$3.2m. Hence, we can conclude that Masaru Okutomi is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	HK$3.7m	HK$3.3m	79%
Other	HK$1.0m	HK$1.0m	21%
Total Compensation	HK$4.7m	HK$4.3m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. It's interesting to note that Pacific Textiles Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 38% a year over the last three years. In the last year, its revenue is down 7.0%.

Few shareholders would be pleased to read that EPS have declined. 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 total shareholder return of -52% over three years, Pacific Textiles Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Pacific Textiles Holdings (1 is significant!) that you should be aware of before investing here.

Important note: Pacific Textiles 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.

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

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.