What Can We Make Of Roma Group's (HKG:8072) CEO Compensation?

Ken Yue became the CEO of Roma Group Limited (HKG:8072) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Roma Group

Comparing Roma Group Limited's CEO Compensation With the industry

According to our data, Roma Group Limited has a market capitalization of HK$44m, and paid its CEO total annual compensation worth HK$2.3m over the year to March 2020. Notably, that's a decrease of 41% over the year before. In particular, the salary of HK$2.25m, 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$991k. Hence, we can conclude that Ken Yue is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Roma Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Roma Group Limited's Growth

Over the last three years, Roma Group Limited has shrunk its earnings per share by 81% per year. It achieved revenue growth of 2.6% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Roma Group Limited Been A Good Investment?

Since shareholders would have lost about 93% over three years, some Roma Group Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Roma Group pays its CEO a majority of compensation through a salary. As previously discussed, Ken is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 6 warning signs for Roma Group you should be aware of, and 3 of them don't sit too well with us.

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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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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