Is Oversea-Chinese Banking Corporation Limited’s (SGX:O39) CEO Overpaid Relative To Its Peers?

Samuel Tsien has been the CEO of Oversea-Chinese Banking Corporation Limited (SGX:O39) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Oversea-Chinese Banking

How Does Samuel Tsien’s Compensation Compare With Similar Sized Companies?

Our data indicates that Oversea-Chinese Banking Corporation Limited is worth S$39b, and total annual CEO compensation was reported as S$11m for the year to December 2019. That’s a modest increase of 3.5% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at S$1.2m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over S$11b, we found that their median CEO total compensation was S$9.0m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Oversea-Chinese Banking. Talking in terms of the sector, salary represented approximately 69% of total compensation out of all the companies we analysed, while other remuneration made up 31% of the pie. Oversea-Chinese Banking sets aside a smaller share of compensation for salary, in comparison to the overall industry.

So Samuel Tsien receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance. The graphic below shows how CEO compensation at Oversea-Chinese Banking has changed from year to year.

SGX:O39 CEO Compensation May 5th 2020
SGX:O39 CEO Compensation May 5th 2020

Is Oversea-Chinese Banking Corporation Limited Growing?

Oversea-Chinese Banking Corporation Limited has seen earnings per share (EPS) move positively by an average of 10% a year, over the last three years (using a line of best fit). Its revenue is up 6.0% over last year.

This demonstrates that the company has been improving recently. A good result. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has Oversea-Chinese Banking Corporation Limited Been A Good Investment?

With a three year total loss of 4.1%, Oversea-Chinese Banking Corporation Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

Samuel Tsien is paid around what is normal for the leaders of larger companies.

We like that the company is growing EPS, but we find the returns over the last three years to be lacking. Considering the the positives we don’t think the CEO pays is too high, but it’s certainly hard to argue it is too low. On another note, Oversea-Chinese Banking has 2 warning signs (and 1 which is concerning) we think you should know about.

If you want to buy a stock that is better than Oversea-Chinese Banking, this free list of high return, low debt companies is a great place to look.

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