Key Things To Understand About Hotel Grand Central's (SGX:H18) CEO Pay Cheque

The CEO of Hotel Grand Central Limited (SGX:H18) is Eng Tan, and this article examines the executive's compensation against the backdrop of overall company performance. 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 Hotel Grand Central

How Does Total Compensation For Eng Tan Compare With Other Companies In The Industry?

Our data indicates that Hotel Grand Central Limited has a market capitalization of S$712m, and total annual CEO compensation was reported as S$556k for the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at S$240k.

For comparison, other companies in the same industry with market capitalizations ranging between S$268m and S$1.1b had a median total CEO compensation of S$432k. So it looks like Hotel Grand Central compensates Eng Tan in line with the median for the industry. Furthermore, Eng Tan directly owns S$1.4m 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 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. It's interesting to note that Hotel Grand Central allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Hotel Grand Central Limited's Growth Numbers

Over the last three years, Hotel Grand Central Limited has shrunk its earnings per share by 32% per year. Its revenue is down 18% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hotel Grand Central Limited Been A Good Investment?

With a three year total loss of 20% for the shareholders, Hotel Grand Central Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Eng is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Hotel Grand Central we think you should know about.

Important note: Hotel Grand Central 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. 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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