Shareholders May Find It Hard To Justify Increasing Asia Standard Hotel Group Limited's (HKG:292) CEO Compensation For Now

By
Simply Wall St
Published
August 20, 2021
SEHK:292
Source: Shutterstock

In the past three years, the share price of Asia Standard Hotel Group Limited (HKG:292) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 27 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Asia Standard Hotel Group

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

Our data indicates that Asia Standard Hotel Group Limited has a market capitalization of HK$424m, and total annual CEO compensation was reported as HK$2.1m for the year to March 2021. We note that's a decrease of 19% compared to last year. We note that the salary of HK$1.20m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.7m. So it looks like Asia Standard Hotel Group compensates Yin Cheng Lim in line with the median for the industry.

Component20212020Proportion (2021)
Salary HK$1.2m HK$1.2m 58%
Other HK$857k HK$1.3m 42%
Total CompensationHK$2.1m HK$2.5m100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. Asia Standard Hotel Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
SEHK:292 CEO Compensation August 20th 2021

Asia Standard Hotel Group Limited's Growth

Over the past three years, Asia Standard Hotel Group Limited has seen its earnings per share (EPS) grow by 54% per year. Its revenue is down 13% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Asia Standard Hotel Group Limited Been A Good Investment?

With a total shareholder return of -47% over three years, Asia Standard Hotel Group Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for Asia Standard Hotel Group that you should be aware of before investing.

Switching gears from Asia Standard Hotel Group, 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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