How Does Associated International Hotels' (HKG:105) CEO Pay Compare With Company Performance?

Hooi Hong Cheong is the CEO of Associated International Hotels Limited (HKG:105), 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.

Check out our latest analysis for Associated International Hotels

Comparing Associated International Hotels Limited's CEO Compensation With the industry

Our data indicates that Associated International Hotels Limited has a market capitalization of HK$5.0b, and total annual CEO compensation was reported as HK$2.6m for the year to March 2020. Notably, that's an increase of 15% over the year before. We note that the salary portion, which stands at HK$1.89m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between HK$3.1b and HK$12b, we discovered that the median CEO total compensation of that group was HK$4.7m. In other words, Associated International Hotels pays its CEO lower than the industry median. Furthermore, Hooi Hong Cheong directly owns HK$29m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. Our data reveals that Associated International Hotels allocates salary more or less in line with the wider market. 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.

Associated International Hotels Limited's Growth

Over the last three years, Associated International Hotels Limited has shrunk its earnings per share by 84% per year. Its revenue is down 12% 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. 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 Associated International Hotels Limited Been A Good Investment?

Given the total shareholder loss of 38% over three years, many shareholders in Associated International Hotels 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 we touched on above, Associated International Hotels Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

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 Associated International Hotels (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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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