Should Shareholders Reconsider Dream International Limited's (HKG:1126) CEO Compensation Package?

Dream International Limited (HKG:1126) has not performed well recently and CEO Kyoo Yoon Choi will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 07 May 2021. 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.

See our latest analysis for Dream International

How Does Total Compensation For Kyoo Yoon Choi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Dream International Limited has a market capitalization of HK$2.1b, and reported total annual CEO compensation of HK$8.3m for the year to December 2020. Notably, that's an increase of 11% over the year before. In particular, the salary of HK$6.47m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$776m to HK$3.1b, we found that the median CEO total compensation was HK$1.4m. This suggests that Kyoo Yoon Choi is paid more than the median for the industry. Furthermore, Kyoo Yoon Choi directly owns HK$1.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$6.5m	HK$5.4m	78%
Other	HK$1.8m	HK$2.0m	22%
Total Compensation	HK$8.3m	HK$7.4m	100%

Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. Our data reveals that Dream International allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Dream International Limited's Growth

Over the last three years, Dream International Limited has shrunk its earnings per share by 12% per year. It saw its revenue drop 4.9% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Dream International Limited Been A Good Investment?

Given the total shareholder loss of 12% over three years, many shareholders in Dream International Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Dream International that investors should be aware of in a dynamic business environment.

Switching gears from Dream International, 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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