Shareholders May Not Be So Generous With Pacific Century Premium Developments Limited's (HKG:432) CEO Compensation And Here's Why

Key Insights

• Pacific Century Premium Developments to hold its Annual General Meeting on 29th of May
• Salary of HK$9.18m is part of CEO Benjamin Lam's total remuneration
• Total compensation is 1,184% above industry average
• Pacific Century Premium Developments' three-year loss to shareholders was 70% while its EPS grew by 26% over the past three years

The underwhelming share price performance of Pacific Century Premium Developments Limited (HKG:432) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Pacific Century Premium Developments

Comparing Pacific Century Premium Developments Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Pacific Century Premium Developments Limited has a market capitalization of HK$422m, and reported total annual CEO compensation of HK$23m for the year to December 2023. That's a modest increase of 5.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$9.2m.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.8m. Accordingly, our analysis reveals that Pacific Century Premium Developments Limited pays Benjamin Lam north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$9.2m	HK$8.9m	39%
Other	HK$14m	HK$13m	61%
Total Compensation	HK$23m	HK$22m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. It's interesting to note that Pacific Century Premium Developments allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Pacific Century Premium Developments Limited's Growth Numbers

Pacific Century Premium Developments Limited's earnings per share (EPS) grew 26% per year over the last three years. In the last year, its revenue is up 47%.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Century Premium Developments Limited Been A Good Investment?

With a total shareholder return of -70% over three years, Pacific Century Premium Developments Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Pacific Century Premium Developments you should be aware of, and 1 of them is significant.

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.

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

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.