Is Magnificent Hotel Investments Limited’s (HKG:201) CEO Pay Justified?

The CEO of Magnificent Hotel Investments Limited (HKG:201) is William Cheng. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Magnificent Hotel Investments

How Does William Cheng’s Compensation Compare With Similar Sized Companies?

Our data indicates that Magnificent Hotel Investments Limited is worth HK$1.5b, and total annual CEO compensation was reported as HK$7.0m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$5.9m. We looked at a group of companies with market capitalizations from HK$784m to HK$3.1b, and the median CEO total compensation was HK$2.3m.

It would therefore appear that Magnificent Hotel Investments Limited pays William Cheng more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. 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.

You can see, below, how CEO compensation at Magnificent Hotel Investments has changed over time.

SEHK:201 CEO Compensation, October 22nd 2019
SEHK:201 CEO Compensation, October 22nd 2019

Is Magnificent Hotel Investments Limited Growing?

On average over the last three years, Magnificent Hotel Investments Limited has grown earnings per share (EPS) by 35% each year (using a line of best fit). Its revenue is up 5.3% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy.

Has Magnificent Hotel Investments Limited Been A Good Investment?

Magnificent Hotel Investments Limited has generated a total shareholder return of 1.4% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by Magnificent Hotel Investments Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Magnificent Hotel Investments (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.