Key Insights

• PCCW will host its Annual General Meeting on 30th of May
• Salary of HK$10.2m is part of CEO Susanna Hui's total remuneration
• The total compensation is 484% higher than the average for the industry
• Over the past three years, PCCW's EPS fell by 68% and over the past three years, the total shareholder return was 20%

Despite PCCW Limited's (HKG:8) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 30th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

How Does Total Compensation For Susanna Hui Compare With Other Companies In The Industry?

At the time of writing, our data shows that PCCW Limited has a market capitalization of HK$32b, and reported total annual CEO compensation of HK$58m for the year to December 2023. We note that's an increase of 10% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$10m.

On examining similar-sized companies in the Hong Kong Telecom industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was HK$9.9m. This suggests that Susanna Hui is paid more than the median for the industry. What's more, Susanna Hui holds HK$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 45% of total compensation represents salary, while the remainder of 55% is other remuneration. It's interesting to note that PCCW 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.

PCCW Limited's Growth

Over the last three years, PCCW Limited has shrunk its earnings per share by 68% per year. In the last year, its revenue changed by just 0.8%.

Overall this is not a very positive result for shareholders. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has PCCW Limited Been A Good Investment?

With a total shareholder return of 20% over three years, PCCW 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.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for PCCW (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.