We Think Some Shareholders May Hesitate To Increase Cornerstone Financial Holdings Limited's (HKG:8112) CEO Compensation

Key Insights

• Cornerstone Financial Holdings' Annual General Meeting to take place on 10th of May
• Salary of HK$1.95m is part of CEO Patrick Jonathan Wong's total remuneration
• The total compensation is 56% higher than the average for the industry
• Cornerstone Financial Holdings' EPS grew by 74% over the past three years while total shareholder return over the past three years was 3.9%

Performance at Cornerstone Financial Holdings Limited (HKG:8112) has been reasonably good and CEO Patrick Jonathan Wong has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 10th of May. However, some shareholders may still want to keep CEO compensation within reason.

Check out our latest analysis for Cornerstone Financial Holdings

How Does Total Compensation For Patrick Jonathan Wong Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cornerstone Financial Holdings Limited has a market capitalization of HK$81m, and reported total annual CEO compensation of HK$2.7m for the year to December 2023. That's just a smallish increase of 5.5% on last year. We note that the salary portion, which stands at HK$1.95m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Media industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.7m. Hence, we can conclude that Patrick Jonathan Wong is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$2.0m	HK$1.9m	72%
Other	HK$758k	HK$714k	28%
Total Compensation	HK$2.7m	HK$2.6m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. It's interesting to note that Cornerstone Financial Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Cornerstone Financial Holdings Limited's Growth

Cornerstone Financial Holdings Limited has seen its earnings per share (EPS) increase by 74% a year over the past three years. Its revenue is up 4.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cornerstone Financial Holdings Limited Been A Good Investment?

With a total shareholder return of 3.9% over three years, Cornerstone Financial Holdings Limited has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Cornerstone Financial Holdings you should be aware of, and 1 of them is significant.

Important note: Cornerstone Financial 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.

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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.