William Chan became the CEO of Rykadan Capital Limited (HKG:2288) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rykadan Capital.
See our latest analysis for Rykadan Capital
Comparing Rykadan Capital Limited's CEO Compensation With the industry
According to our data, Rykadan Capital Limited has a market capitalization of HK$240m, and paid its CEO total annual compensation worth HK$19m over the year to March 2020. That's a slight decrease of 7.5% on the prior year. In particular, the salary of HK$12.0m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. Accordingly, our analysis reveals that Rykadan Capital Limited pays William Chan north of the industry median. Moreover, William Chan also holds HK$84m worth of Rykadan Capital stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$12m | HK$12m | 65% |
| Other | HK$6.5m | HK$8.0m | 35% |
| Total Compensation | HK$19m | HK$20m | 100% |
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. Although there is a difference in how total compensation is set, Rykadan Capital more or less reflects the market in terms of setting the salary. 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.
A Look at Rykadan Capital Limited's Growth Numbers
Over the last three years, Rykadan Capital Limited has shrunk its earnings per share by 5.3% per year. It saw its revenue drop 75% over the last 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Rykadan Capital Limited Been A Good Investment?
Given the total shareholder loss of 22% over three years, many shareholders in Rykadan Capital Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we touched on above, Rykadan Capital Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Rykadan Capital that investors should think about before committing capital to this 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.
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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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About SEHK:2288
Rykadan Capital
An investment holding company, engages in the property investment and development business in Hong Kong, the United States, and the People's Republic of China.
Mediocre balance sheet low.
