The results at Roma Group Limited (HKG:8072) have been quite disappointing recently and CEO Ken Yue bears some responsibility for this. At the upcoming AGM on 27 September 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.
Comparing Roma Group Limited's CEO Compensation With the industry
According to our data, Roma Group Limited has a market capitalization of HK$164m, and paid its CEO total annual compensation worth HK$2.6m over the year to March 2021. That's a notable increase of 15% on last year. In particular, the salary of HK$2.44m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. From this we gather that Ken Yue is paid around the median for CEOs in the industry.
Speaking on an industry level, nearly 97% of total compensation represents salary, while the remainder of 3% is other remuneration. Roma Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Roma Group Limited's Growth Numbers
Roma Group Limited has reduced its earnings per share by 28% a year over the last three years. In the last year, its revenue is up 7.8%.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Roma Group Limited Been A Good Investment?
The return of -79% over three years would not have pleased Roma Group Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Roma Group we think you should know about.
Important note: Roma Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
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