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. These concerns will be at the front of shareholders’ minds as they go into the AGM coming up on 29 April 2021. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO’s compensation until company performance improves.
Check out our latest analysis for Central Pacific Financial
Comparing Central Pacific Financial Corp.’s CEO Compensation With the industry
At the time of writing, our data shows that Central Pacific Financial Corp. has a market capitalization of US$770m, and reported total annual CEO compensation of US$1.5m for the year to December 2020. That’s a notable decrease of 41% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$563k.
On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$1.6m. This suggests that Central Pacific Financial remunerates its CEO largely in line with the industry average. Furthermore, Paul Yonamine directly owns US$798k worth of shares in the company.
| 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% |
Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. Although there is a difference in how total compensation is set, Central Pacific Financial more or less reflects the market in terms of setting the salary. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.
NYSE:CPF CEO Compensation April 24th 2021
Central Pacific Financial Corp.’s Growth
Over the last three years, Central Pacific Financial Corp. has not seen its earnings per share change much, though they have deteriorated slightly. It saw its revenue drop 7.4% over the last year.
A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-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 generated a total shareholder return of 2.4% over three years, so most shareholders wouldn’t be too disappointed. Although, there’s always room to improve. 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.
In Summary…
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.
CEO compensation can have a massive impact on performance, but it’s just one element. We did our research and spotted 3 warning signs for Central Pacific Financial that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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Originally Appeared On: https://simplywall.st/stocks/us/banks/nyse-cpf/central-pacific-financial/news/we-think-central-pacific-financial-corps-nysecpf-ceo-may-str