It Looks Like Regal Hotels International Holdings Limited's (HKG:78) CEO May Expect Their Salary To Be Put Under The Microscope

By
Simply Wall St
Published
June 01, 2021
SEHK:78
Source: Shutterstock

The results at Regal Hotels International Holdings Limited (HKG:78) have been quite disappointing recently and CEO Yuk Sui Lo bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 08 June 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Regal Hotels International Holdings

Comparing Regal Hotels International Holdings Limited's CEO Compensation With the industry

According to our data, Regal Hotels International Holdings Limited has a market capitalization of HK$3.6b, and paid its CEO total annual compensation worth HK$9.4m over the year to December 2020. That's a notable decrease of 12% on last year. We note that the salary portion, which stands at HK$8.54m constitutes the majority of total compensation received by 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$2.4m. Hence, we can conclude that Yuk Sui Lo is remunerated higher than the industry median. Moreover, Yuk Sui Lo also holds HK$130m worth of Regal Hotels International Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary HK$8.5m HK$9.1m 91%
Other HK$880k HK$1.6m 9%
Total CompensationHK$9.4m HK$11m100%

On an industry level, around 87% of total compensation represents salary and 13% is other remuneration. Regal Hotels International Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
SEHK:78 CEO Compensation June 1st 2021

Regal Hotels International Holdings Limited's Growth

Over the last three years, Regal Hotels International Holdings Limited has shrunk its earnings per share by 101% per year. Its revenue is down 81% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Regal Hotels International Holdings Limited Been A Good Investment?

Since shareholders would have lost about 16% over three years, some Regal Hotels International Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Regal Hotels International Holdings you should be aware of, and 2 of them are a bit concerning.

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. 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.