Yahoo Finance Should You Worry About CDL Hospitality Trusts’s (SGX:J85) CEO Salary Level?
Vincent Yeo is the CEO of CDL Hospitality Trusts (SGX:J85), which has recently grown to a market capitalization of S$1.99B. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. I will break down Yeo’s pay and compare this to the company’s performance over the same period, as well as measure it against other SGX-listed CEOs leading companies of similar size and profitability. View our latest analysis for CDL Hospitality Trusts
What has been the trend in J85’s earnings?
J85 can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains. Most recently, J85 produced a profit of S$139.40M , which is an increase of 202.93% from its last year’s earnings of S$46.02M. This is an encouraging signal that J85 aims to sustain a strong track record of generating profits regardless of the challenges. As profits are moving up and up, CEO pay should echo Yeo’s valued-adding activities. Over the same period Yeo’s total compensation remained stable at S$0 since the previous year. Although I couldn’t find information on the composition of Yeo’s pay, if some portion were non-cash items such as stocks and options, then fluctuations in J85’s share price can affect the true level of what the CEO actually collects at the end of the year.
Is J85 overpaying the CEO?
While one size does not fit all, since remuneration should account for specific factors of the company and market, we can evaluate a high-level yardstick to see if J85 deviates substantially from its peers. This exercise can help shareholders ask the right question about Yeo’s incentive alignment. Typically, a SGX small-cap has a value of SG$396M, generates earnings of SG$29.7M, and pays its CEO circa SG$1.2M per year. Considering J85’s size and performance, in terms of market cap and earnings, it seems that Yeo is
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The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
