Is Merdeka Financial Group Limited’s (HKG:8163) CEO Pay Fair?

Wilson Cheung has been the CEO of Merdeka Financial Group Limited (HKG:8163) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Merdeka Financial Group

How Does Wilson Cheung’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Merdeka Financial Group Limited has a market cap of HK$30m, and reported total annual CEO compensation of HK$3.9m for the year to December 2018. Notably, the salary of HK$3.9m is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.8m.

It would therefore appear that Merdeka Financial Group Limited pays Wilson Cheung more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Merdeka Financial Group has changed from year to year.

SEHK:8163 CEO Compensation, February 12th 2020
SEHK:8163 CEO Compensation, February 12th 2020

Is Merdeka Financial Group Limited Growing?

Merdeka Financial Group Limited has increased its earnings per share (EPS) by an average of 5.7% a year, over the last three years (using a line of best fit). Its revenue is up 4.2% over last year.

I’d prefer higher revenue growth, but I’m happy with the modest EPS growth. It’s clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Although we don’t have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Merdeka Financial Group Limited Been A Good Investment?

Since shareholders would have lost about 90% over three years, some Merdeka Financial Group Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount Merdeka Financial Group Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. Whatever your view on compensation, you might want to check if insiders are buying or selling Merdeka Financial Group shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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