A Quick Analysis On Regal Hotels International Holdings' (HKG:78) CEO Compensation

This article will reflect on the compensation paid to Yuk Sui Lo who has served as CEO of Regal Hotels International Holdings Limited (HKG:78) since 2007. This analysis will also assess whether Regal Hotels International Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Regal Hotels International Holdings

How Does Total Compensation For Yuk Sui Lo Compare With Other Companies In The Industry?

According to our data, Regal Hotels International Holdings Limited has a market capitalization of HK$2.9b, and paid its CEO total annual compensation worth HK$11m over the year to December 2019. That is, the compensation was roughly the same as last year. In particular, the salary of HK$9.12m, makes up a huge portion of the total compensation being paid to the CEO.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was HK$6.8m. Accordingly, our analysis reveals that Regal Hotels International Holdings Limited pays Yuk Sui Lo north of the industry median. What's more, Yuk Sui Lo holds HK$102m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Although there is a difference in how total compensation is set, Regal Hotels International Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Regal Hotels International Holdings Limited's Growth

Over the last three years, Regal Hotels International Holdings Limited has shrunk its earnings per share by 61% per year. Its revenue is down 45% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Regal Hotels International Holdings Limited Been A Good Investment?

With a three year total loss of 40% for the shareholders, Regal Hotels International Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Yuk Sui is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Regal Hotels International Holdings that investors should look into moving forward.

Important note: Regal Hotels International Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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