A Quick Analysis On Royal Catering Group Holdings' (HKG:8300) CEO Compensation

Man Wai Wong is the CEO of Royal Catering Group Holdings Company Limited (HKG:8300), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Royal Catering Group Holdings

Comparing Royal Catering Group Holdings Company Limited's CEO Compensation With the industry

Our data indicates that Royal Catering Group Holdings Company Limited has a market capitalization of HK$100m, and total annual CEO compensation was reported as HK$5.0m for the year to March 2020. We note that's an increase of 61% above last year. We note that the salary portion, which stands at HK$3.00m constitutes the majority of 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$2.0m. This suggests that Man Wai Wong is paid more than the median for the industry. Furthermore, Man Wai Wong directly owns HK$69m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 87% of total compensation represents salary, while the remainder of 13% is other remuneration. It's interesting to note that Royal Catering Group Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Royal Catering Group Holdings Company Limited's Growth

Over the last three years, Royal Catering Group Holdings Company Limited has shrunk its earnings per share by 94% per year. Its revenue is down 46% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Royal Catering Group Holdings Company Limited Been A Good Investment?

Given the total shareholder loss of 66% over three years, many shareholders in Royal Catering Group Holdings Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Man Wai is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 Royal Catering Group Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Switching gears from Royal Catering Group Holdings, 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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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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