Key Insights

• Pacific Online will host its Annual General Meeting on 3rd of May
• CEO Wai Yan Lam's total compensation includes salary of CN¥843.0k
• Total compensation is similar to the industry average
• Pacific Online's EPS declined by 124% over the past three years while total shareholder loss over the past three years was 71%

The results at Pacific Online Limited (HKG:543) have been quite disappointing recently and CEO Wai Yan Lam bears some responsibility for this. At the upcoming AGM on 3rd of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

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

Our data indicates that Pacific Online Limited has a market capitalization of HK$471m, and total annual CEO compensation was reported as CN¥3.1m for the year to December 2023. That's a slight decrease of 5.1% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥843k.

On comparing similar-sized companies in the Hong Kong Interactive Media and Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥2.9m. So it looks like Pacific Online compensates Wai Yan Lam in line with the median for the industry. What's more, Wai Yan Lam holds HK$133m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 38% of total compensation represents salary and 62% is other remuneration. Pacific Online pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Pacific Online Limited's Growth

Pacific Online Limited has reduced its earnings per share by 124% a year over the last three years. It saw its revenue drop 9.0% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pacific Online Limited Been A Good Investment?

With a total shareholder return of -71% over three years, Pacific Online Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 3 warning signs (and 2 which are a bit concerning) in Pacific Online we think you should know about.

Switching gears from Pacific Online, 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.