Here's Why Pak Tak International Limited's (HKG:2668) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• Pak Tak International's Annual General Meeting to take place on 21st of June
• Total pay for CEO Pu Qian includes HK$1.58m salary
• The overall pay is 53% below the industry average
• Pak Tak International's EPS declined by 133% over the past three years while total shareholder return over the past three years was 130%

The performance at Pak Tak International Limited (HKG:2668) has been rather lacklustre of late and shareholders may be wondering what CEO Pu Qian is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 21st of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for Pak Tak International

Comparing Pak Tak International Limited's CEO Compensation With The Industry

Our data indicates that Pak Tak International Limited has a market capitalization of HK$2.5b, and total annual CEO compensation was reported as HK$1.7m for the year to December 2023. That's a slight decrease of 7.3% on the prior year. We note that the salary portion, which stands at HK$1.58m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Luxury industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of HK$3.6m. In other words, Pak Tak International pays its CEO lower than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$1.6m	HK$1.6m	95%
Other	HK$81k	HK$244k	5%
Total Compensation	HK$1.7m	HK$1.8m	100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. Pak Tak International pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Pak Tak International Limited's Growth Numbers

Over the last three years, Pak Tak International Limited has shrunk its earnings per share by 133% per year. In the last year, its revenue is down 44%.

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. 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 Pak Tak International Limited Been A Good Investment?

We think that the total shareholder return of 130%, over three years, would leave most Pak Tak International Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Pu receives almost all of their compensation through a salary. Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

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 Pak Tak International (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.

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