In 2017 Ken Yue was appointed CEO of Roma Group Limited (HKG:8072). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ken Yue's Compensation Compare With Similar Sized Companies?
Our data indicates that Roma Group Limited is worth HK$41m, and total annual CEO compensation was reported as HK$3.8m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$3.1m. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.7m.
Thus we can conclude that Ken Yue receives more in total compensation than the median of a group of companies in the same market, and of similar size to Roma Group Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Roma Group, below.
Is Roma Group Limited Growing?
Roma Group Limited has reduced its earnings per share by an average of 122% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 15%.
Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Roma Group Limited Been A Good Investment?
Since shareholders would have lost about 95% over three years, some Roma Group Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by Roma Group Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Roma Group (free visualization of insider trades).
If you want to buy a stock that is better than Roma Group, this free list of high return, low debt companies is a great place to look.
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