Shareholders Will Probably Hold Off On Increasing Magnificent Hotel Investments Limited's (HKG:201) CEO Compensation For The Time Being

Key Insights

• Magnificent Hotel Investments to hold its Annual General Meeting on 23rd of May
• Salary of HK$6.56m is part of CEO William Cheng's total remuneration
• The total compensation is 255% higher than the average for the industry
• Magnificent Hotel Investments' three-year loss to shareholders was 47% while its EPS was down 53% over the past three years

We've discovered 1 warning sign about Magnificent Hotel Investments. View them for free.

In the past three years, the share price of Magnificent Hotel Investments Limited (HKG:201) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 23rd of May will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Magnificent Hotel Investments

How Does Total Compensation For William Cheng Compare With Other Companies In The Industry?

According to our data, Magnificent Hotel Investments Limited has a market capitalization of HK$617m, and paid its CEO total annual compensation worth HK$8.5m over the year to December 2024. There was no change in the compensation compared to last year. We note that the salary portion, which stands at HK$6.56m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Hospitality industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.4m. This suggests that William Cheng is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	HK$6.6m	HK$6.6m	77%
Other	HK$2.0m	HK$2.0m	23%
Total Compensation	HK$8.5m	HK$8.5m	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. Our data reveals that Magnificent Hotel Investments allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Magnificent Hotel Investments Limited's Growth

Magnificent Hotel Investments Limited has reduced its earnings per share by 53% a year over the last three years. It achieved revenue growth of 16% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Magnificent Hotel Investments Limited Been A Good Investment?

With a total shareholder return of -47% over three years, Magnificent Hotel Investments Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. In the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan is in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Magnificent Hotel Investments that you should be aware of before investing.

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. 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.