Yahoo Finance Shareholders May Find It Hard To Justify Increasing Cathay General Bancorp's (NASDAQ:CATY) CEO Compensation For Now
Key Insights
Cathay General Bancorp to hold its Annual General Meeting on 14th of May
Total pay for CEO Chang Liu includes US$900.8k salary
The total compensation is similar to the average for the industry
Cathay General Bancorp's three-year loss to shareholders was 1.7% while its EPS grew by 12% over the past three years
As many shareholders of Cathay General Bancorp (NASDAQ:CATY) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 14th of May could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
View our latest analysis for Cathay General Bancorp
Comparing Cathay General Bancorp's CEO Compensation With The Industry
At the time of writing, our data shows that Cathay General Bancorp has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$3.5m for the year to December 2023. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$901k.
In comparison with other companies in the American Banks industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$4.6m. From this we gather that Chang Liu is paid around the median for CEOs in the industry. Furthermore, Chang Liu directly owns US$3.2m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$901k | US$811k | 25% |
Other | US$2.6m | US$2.8m | 75% |
Total Compensation | US$3.5m | US$3.6m | 100% |
On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. Cathay General Bancorp sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Cathay General Bancorp's Growth
Over the past three years, Cathay General Bancorp has seen its earnings per share (EPS) grow by 12% per year. In the last year, its revenue is down 5.6%.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Cathay General Bancorp Been A Good Investment?
Given the total shareholder loss of 1.7% over three years, many shareholders in Cathay General Bancorp are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Cathay General Bancorp that you should be aware of before investing.
Switching gears from Cathay General Bancorp, 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.
