How Does First Pacific's (HKG:142) CEO Pay Compare With Company Performance?

Manny Pangilinan became the CEO of First Pacific Company Limited (HKG:142) in 2003, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for First Pacific

How Does Total Compensation For Manny Pangilinan Compare With Other Companies In The Industry?

According to our data, First Pacific Company Limited has a market capitalization of HK$11b, and paid its CEO total annual compensation worth US$13m over the year to December 2019. Notably, that's an increase of 84% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$4.7m.

In comparison with other companies in the industry with market capitalizations ranging from HK$7.8b to HK$25b, the reported median CEO total compensation was US$1.2m. Accordingly, our analysis reveals that First Pacific Company Limited pays Manny Pangilinan north of the industry median. Furthermore, Manny Pangilinan directly owns HK$179m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. First Pacific sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

First Pacific Company Limited's Growth

Over the last three years, First Pacific Company Limited has shrunk its earnings per share by 90% per year. It saw its revenue drop 4.7% over the last year.

Overall this is not a very positive result for shareholders. 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 First Pacific Company Limited Been A Good Investment?

With a three year total loss of 46% for the shareholders, First Pacific Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, First Pacific pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is potentially serious) in First Pacific we think you should know about.

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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