We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Perfect Optronics Limited's (HKG:8311) CEO For Now

CEO Wai Tak Cheng has done a decent job of delivering relatively good performance at Perfect Optronics Limited (HKG:8311) recently. 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 06 May 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Perfect Optronics

Comparing Perfect Optronics Limited's CEO Compensation With the industry

Our data indicates that Perfect Optronics Limited has a market capitalization of HK$504m, and total annual CEO compensation was reported as HK$5.3m for the year to December 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at HK$4.89m 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. Hence, we can conclude that Wai Tak Cheng is remunerated higher than the industry median. Furthermore, Wai Tak Cheng directly owns HK$305m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. According to our research, Perfect Optronics has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Perfect Optronics Limited's Growth

Perfect Optronics Limited's earnings per share (EPS) grew 53% per year over the last three years. In the last year, its revenue is up 25%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Perfect Optronics Limited Been A Good Investment?

With a total shareholder return of 10.0% over three years, Perfect Optronics Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is concerning) in Perfect Optronics we think you should know about.

Switching gears from Perfect Optronics, 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. 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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