We Discuss Why Rykadan Capital Limited's (HKG:2288) CEO Compensation May Be Closely Reviewed

Key Insights

• Rykadan Capital's Annual General Meeting to take place on 20th of September
• CEO William Chan's total compensation includes salary of HK$9.87m
• The total compensation is 450% higher than the average for the industry
• Rykadan Capital's three-year loss to shareholders was 43% while its EPS was down 77% over the past three years

Rykadan Capital Limited (HKG:2288) has not performed well recently and CEO William Chan will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 20th of September. 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.

Check out our latest analysis for Rykadan Capital

How Does Total Compensation For William Chan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rykadan Capital Limited has a market capitalization of HK$92m, and reported total annual CEO compensation of HK$12m for the year to March 2023. That's a fairly small increase of 5.9% over the previous year. We note that the salary portion, which stands at HK$9.87m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. This suggests that William Chan is paid more than the median for the industry. Furthermore, William Chan directly owns HK$32m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$9.9m	HK$9.7m	83%
Other	HK$2.1m	HK$1.6m	17%
Total Compensation	HK$12m	HK$11m	100%

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. There isn't a significant difference between Rykadan Capital and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Rykadan Capital Limited's Growth Numbers

Over the last three years, Rykadan Capital Limited has shrunk its earnings per share by 77% per year. In the last year, its revenue changed by just 0.9%.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. 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 Rykadan Capital Limited Been A Good Investment?

Few Rykadan Capital Limited shareholders would feel satisfied with the return of -43% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Rykadan Capital (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Rykadan Capital, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.