Should Shareholders Reconsider Pacific Online Limited's (HKG:543) CEO Compensation Package?

Key Insights

• Pacific Online to hold its Annual General Meeting on 3rd of May
• CEO Wai Yan Lam's total compensation includes salary of CN¥843.0k
• The overall pay is comparable to the industry average
• Over the past three years, Pacific Online's EPS fell by 124% and over the past three years, the total loss to shareholders 71%

Shareholders will probably not be too impressed with the underwhelming results at Pacific Online Limited (HKG:543) recently. At the upcoming AGM on 3rd of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Pacific Online

How Does Total Compensation For Wai Yan Lam Compare With Other Companies In The Industry?

Our data indicates that Pacific Online Limited has a market capitalization of HK$471m, and total annual CEO compensation was reported as CN¥3.1m for the year to December 2023. We note that's a small decrease of 5.1% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥843k.

In comparison with other companies in the Hong Kong Interactive Media and Services industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥2.9m. This suggests that Pacific Online remunerates its CEO largely in line with the industry average. Furthermore, Wai Yan Lam directly owns HK$133m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥843k	CN¥804k	28%
Other	CN¥2.2m	CN¥2.4m	72%
Total Compensation	CN¥3.1m	CN¥3.2m	100%

On an industry level, roughly 38% of total compensation represents salary and 62% is other remuneration. It's interesting to note that Pacific Online allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Pacific Online Limited's Growth

Over the last three years, Pacific Online Limited has shrunk its earnings per share by 124% per year. Its revenue is down 9.0% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Pacific Online Limited Been A Good Investment?

With a total shareholder return of -71% over three years, Pacific Online 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

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 3 warning signs for Pacific Online (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Pacific Online, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.