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Shareholders Will Probably Be Cautious Of Increasing Central Pacific Financial Corp.'s (NYSE:CPF) CEO Compensation At The Moment

·4 min read

Share price growth at Central Pacific Financial Corp. (NYSE:CPF) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. The upcoming AGM on 29 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Central Pacific Financial

Comparing Central Pacific Financial Corp.'s CEO Compensation With the industry

Our data indicates that Central Pacific Financial Corp. has a market capitalization of US$770m, and total annual CEO compensation was reported as US$1.5m for the year to December 2020. That's a notable decrease of 41% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$563k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$1.6m. From this we gather that Paul Yonamine is paid around the median for CEOs in the industry. What's more, Paul Yonamine holds US$798k worth of shares in the company in their own name.

Component

2020

2019

Proportion (2020)

Salary

US$563k

US$566k

39%

Other

US$892k

US$1.9m

61%

Total Compensation

US$1.5m

US$2.5m

100%

On an industry level, around 42% of total compensation represents salary and 58% is other remuneration. Our data reveals that Central Pacific Financial allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Central Pacific Financial Corp.'s Growth Numbers

Earnings per share at Central Pacific Financial Corp. are much the same as they were three years ago, albeit slightly lower. Its revenue is down 7.4% over the previous year.

The lack of EPS growth is certainly uninspiring. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Central Pacific Financial Corp. Been A Good Investment?

Central Pacific Financial Corp. has not done too badly by shareholders, with a total return of 2.4%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Central Pacific Financial that investors should think about before committing capital to this stock.

Switching gears from Central Pacific Financial, 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.

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.

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