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Is Preferred Bank's (NASDAQ:PFBC) CEO Pay Fair?

Simply Wall St

Li Yu has been the CEO of Preferred Bank (NASDAQ:PFBC) since 1993. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Preferred Bank

How Does Li Yu's Compensation Compare With Similar Sized Companies?

According to our data, Preferred Bank has a market capitalization of US$816m, and paid its CEO total annual compensation worth US$4.5m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$946k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.

As you can see, Li Yu is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Preferred Bank is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Preferred Bank has changed over time.

NasdaqGS:PFBC CEO Compensation, September 27th 2019

Is Preferred Bank Growing?

On average over the last three years, Preferred Bank has grown earnings per share (EPS) by 27% each year (using a line of best fit). In the last year, its revenue is up 13%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Preferred Bank Been A Good Investment?

Most shareholders would probably be pleased with Preferred Bank for providing a total return of 58% 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.

In Summary...

We compared the total CEO remuneration paid by Preferred Bank, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Preferred Bank insiders are buying or selling shares.

If you want to buy a stock that is better than Preferred Bank, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.