How Should Investors React To Pacific Basin Shipping Limited's (HKG:2343) CEO Pay?
Mats Berglund became the CEO of Pacific Basin Shipping Limited (HKG:2343) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Pacific Basin Shipping
How Does Mats Berglund's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Pacific Basin Shipping Limited has a market cap of HK$4.3b, and reported total annual CEO compensation of US$1.9m for the year to December 2019. That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$418k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Pacific Basin Shipping. On a sector level, around 80% of total compensation represents salary and 20% is other remuneration. Readers will want to know that Pacific Basin Shipping pays a modest slice of remuneration through salary, as compared to the wider sector.
It would therefore appear that Pacific Basin Shipping Limited pays Mats Berglund more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Pacific Basin Shipping, below.
Is Pacific Basin Shipping Limited Growing?
Pacific Basin Shipping Limited has seen earnings per share (EPS) move positively by an average of 99% a year, over the last three years (using a line of best fit). Revenue was pretty flat on last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has Pacific Basin Shipping Limited Been A Good Investment?
Since shareholders would have lost about 38% over three years, some Pacific Basin Shipping Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We compared the total CEO remuneration paid by Pacific Basin Shipping Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. Shifting gears from CEO pay for a second, we've spotted 4 warning signs for Pacific Basin Shipping you should be aware of, and 1 of them is a bit unpleasant.
Important note: Pacific Basin Shipping may not be the best stock to buy. 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. 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. Thank you for reading.
