Most Shareholders Will Probably Agree With Pinestone Capital Limited's (HKG:804) CEO Compensation

Shareholders may be wondering what CEO Jonathan Cheung plans to do to improve the less than great performance at Pinestone Capital Limited (HKG:804) recently. At the next AGM coming up on 08 June 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. 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 Pinestone Capital

Comparing Pinestone Capital Limited's CEO Compensation With the industry

Our data indicates that Pinestone Capital Limited has a market capitalization of HK$149m, and total annual CEO compensation was reported as HK$1.3m for the year to December 2020. Notably, that's an increase of 8.2% over the year before. We note that the salary portion, which stands at HK$1.20m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.0m. This suggests that Jonathan Cheung is paid below the industry median. What's more, Jonathan Cheung holds HK$30m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	HK$1.2m	HK$1.2m	91%
Other	HK$118k	HK$18k	9%
Total Compensation	HK$1.3m	HK$1.2m	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. There isn't a significant difference between Pinestone Capital and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Pinestone Capital Limited's Growth Numbers

Pinestone Capital Limited has reduced its earnings per share by 73% a year over the last three years. Its revenue is up 23% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pinestone Capital Limited Been A Good Investment?

Few Pinestone Capital Limited shareholders would feel satisfied with the return of -79% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning. The poor performance of the share price might have something to do with the lack of earnings growth. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Pinestone Capital (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Pinestone Capital 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.

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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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