Key Insights

• Pak Tak International's Annual General Meeting to take place on 21st of June
• CEO Pu Qian's total compensation includes salary of HK$1.58m
• Total compensation is 53% below industry average
• Pak Tak International's EPS declined by 133% over the past three years while total shareholder return over the past three years was 130%

The performance at Pak Tak International Limited (HKG:2668) has been rather lacklustre of late and shareholders may be wondering what CEO Pu Qian is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 21st of June. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

How Does Total Compensation For Pu Qian Compare With Other Companies In The Industry?

Our data indicates that Pak Tak International Limited has a market capitalization of HK$2.5b, and total annual CEO compensation was reported as HK$1.7m for the year to December 2023. That's slightly lower by 7.3% over the previous year. We note that the salary portion, which stands at HK$1.58m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Luxury industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was HK$3.6m. Accordingly, Pak Tak International pays its CEO under the industry median.

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6% is other remuneration. Pak Tak International is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.

Pak Tak International Limited's Growth

Pak Tak International Limited has reduced its earnings per share by 133% a year over the last three years. In the last year, its revenue is down 44%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pak Tak International Limited Been A Good Investment?

Most shareholders would probably be pleased with Pak Tak International Limited for providing a total return of 130% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Pu receives almost all of their compensation through a salary. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 2 which don't sit too well with us) in Pak Tak International we think you should know about.

Switching gears from Pak Tak International, 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. 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.

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