Does Royal Deluxe Holdings' (HKG:3789) CEO Salary Compare Well With Industry Peers?

This article will reflect on the compensation paid to Lai Heng Chao who has served as CEO of Royal Deluxe Holdings Limited (HKG:3789) since 2018. This analysis will also assess whether Royal Deluxe Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Royal Deluxe Holdings

Comparing Royal Deluxe Holdings Limited's CEO Compensation With the industry

According to our data, Royal Deluxe Holdings Limited has a market capitalization of HK$122m, and paid its CEO total annual compensation worth HK$5.2m over the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$4.80m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. Hence, we can conclude that Lai Heng Chao is remunerated higher than the industry median.

On an industry level, around 91% of total compensation represents salary and 8.7% is other remuneration. There isn't a significant difference between Royal Deluxe Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Royal Deluxe Holdings Limited's Growth

Royal Deluxe Holdings Limited has reduced its earnings per share by 20% a year over the last three years. It achieved revenue growth of 23% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Royal Deluxe Holdings Limited Been A Good Investment?

Given the total shareholder loss of 69% over three years, many shareholders in Royal Deluxe Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Lai Heng is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Royal Deluxe Holdings is in a sound position, considering both metrics are down. On the bright side, at lease revenue growth seems to be marching northward. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 6 warning signs for Royal Deluxe Holdings (1 is significant!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
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