Key Insights

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

Shareholders of Pacific Century Premium Developments Limited (HKG:432) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held 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 discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

How Does Total Compensation For Benjamin Lam Compare With Other Companies In The Industry?

According to our data, Pacific Century Premium Developments Limited has a market capitalization of HK$422m, and paid its CEO total annual compensation worth HK$23m over the year to December 2023. That's a fairly small increase of 5.5% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$9.2m.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. This suggests that Benjamin Lam is paid more than the median for the industry.

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. In Pacific Century Premium Developments' case, non-salary compensation represents a greater slice of total remuneration, 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.

Pacific Century Premium Developments Limited's Growth

Pacific Century Premium Developments Limited has seen its earnings per share (EPS) increase by 26% a year over the past three years. It achieved revenue growth of 47% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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 concerning.

Important note: Pacific Century Premium Developments is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.