We Discuss Why Regal Hotels International Holdings Limited's (HKG:78) CEO Compensation May Be Closely Reviewed

Key Insights

• Regal Hotels International Holdings will host its Annual General Meeting on 13th of June
• CEO Yuk Sui Lo's total compensation includes salary of HK$8.21m
• The overall pay is 78% above the industry average
• Regal Hotels International Holdings' EPS declined by 40% over the past three years while total shareholder loss over the past three years was 39%

Regal Hotels International Holdings Limited (HKG:78) has not performed well recently and CEO Yuk Sui Lo will probably need to up their game. At the upcoming AGM on 13th of June, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Regal Hotels International Holdings

Comparing Regal Hotels International Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Regal Hotels International Holdings Limited has a market capitalization of HK$2.3b, and reported total annual CEO compensation of HK$9.2m for the year to December 2023. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$8.21m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Hong Kong Hospitality industry with market caps ranging from HK$781m to HK$3.1b, we found that the median CEO total compensation was HK$5.2m. This suggests that Yuk Sui Lo is paid more than the median for the industry. Moreover, Yuk Sui Lo also holds HK$81m 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.

Component	2023	2022	Proportion (2023)
Salary	HK$8.2m	HK$8.1m	89%
Other	HK$1.0m	HK$1.5m	11%
Total Compensation	HK$9.2m	HK$9.5m	100%

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 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 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.

Regal Hotels International Holdings Limited's Growth

Over the last three years, Regal Hotels International Holdings Limited has shrunk its earnings per share by 40% per year. Its revenue is down 12% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Regal Hotels International Holdings Limited Been A Good Investment?

With a total shareholder return of -39% over three years, Regal Hotels International Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Regal Hotels International Holdings that you should be aware of before investing.

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. 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.