Increases to Pacific & Orient Berhad's (KLSE:P&O) CEO Compensation Might Cool off for now

Performance at Pacific & Orient Berhad (KLSE:P&O) has been reasonably good and CEO Thye Seng Chan has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 10 March 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Pacific & Orient Berhad

Comparing Pacific & Orient Berhad's CEO Compensation With the industry

Our data indicates that Pacific & Orient Berhad has a market capitalization of RM254m, and total annual CEO compensation was reported as RM2.0m for the year to September 2020. That's a slight decrease of 5.7% on the prior year. We note that the salary portion, which stands at RM1.34m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below RM812m, reported a median total CEO compensation of RM398k. Accordingly, our analysis reveals that Pacific & Orient Berhad pays Thye Seng Chan north of the industry median. What's more, Thye Seng Chan holds RM93m 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	RM1.3m	RM1.3m	68%
Other	RM644k	RM780k	32%
Total Compensation	RM2.0m	RM2.1m	100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Our data reveals that Pacific & Orient Berhad allocates salary more or less in line with the wider market. 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.

A Look at Pacific & Orient Berhad's Growth Numbers

Pacific & Orient Berhad has seen its earnings per share (EPS) increase by 49% a year over the past three years. In the last year, its revenue is down 6.5%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in 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 & Orient Berhad Been A Good Investment?

With a total shareholder return of 6.6% over three years, Pacific & Orient Berhad 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...

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. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

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 3 warning signs for Pacific & Orient Berhad you should be aware of, and 1 of them makes us a bit uncomfortable.

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.

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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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