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Hotel Royal Limited's (SGX:H12) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

  • Hotel Royal's Annual General Meeting to take place on 26th of April

  • CEO Chou Hock Lee's total compensation includes salary of S$306.8k

  • The total compensation is 234% higher than the average for the industry

  • Hotel Royal's EPS grew by 106% over the past three years while total shareholder loss over the past three years was 41%

In the past three years, the share price of Hotel Royal Limited (SGX:H12) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 26th of April. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Hotel Royal

Comparing Hotel Royal Limited's CEO Compensation With The Industry

According to our data, Hotel Royal Limited has a market capitalization of S$203m, and paid its CEO total annual compensation worth S$373k over the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of S$306.8k, makes up a huge portion of the total compensation being paid to the CEO.

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In comparison with other companies in the Singapore Hospitality industry with market capitalizations under S$272m, the reported median total CEO compensation was S$111k. Hence, we can conclude that Chou Hock Lee is remunerated higher than the industry median. What's more, Chou Hock Lee holds S$313k worth of shares in the company in their own name.

Component

2023

2022

Proportion (2023)

Salary

S$307k

S$307k

82%

Other

S$66k

S$66k

18%

Total Compensation

S$373k

S$373k

100%

On an industry level, around 73% of total compensation represents salary and 27% is other remuneration. Hotel Royal is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.

ceo-compensation
ceo-compensation

Hotel Royal Limited's Growth

Over the past three years, Hotel Royal Limited has seen its earnings per share (EPS) grow by 106% per year. In the last year, its revenue is up 39%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hotel Royal Limited Been A Good Investment?

The return of -41% over three years would not have pleased Hotel Royal Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Hotel Royal that you should be aware of before investing.

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.

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.