This article will reflect on the compensation paid to Fanxing Kong who has served as CEO of Far East Horizon Limited (HKG:3360) since 2009. This analysis will also assess whether Far East Horizon pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Far East Horizon
How Does Total Compensation For Fanxing Kong Compare With Other Companies In The Industry?
At the time of writing, our data shows that Far East Horizon Limited has a market capitalization of HK$32b, and reported total annual CEO compensation of CN¥7.3m for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at CN¥4.78m constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was CN¥8.5m. This suggests that Far East Horizon remunerates its CEO largely in line with the industry average. Furthermore, Fanxing Kong directly owns HK$96m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CN¥4.8m | CN¥4.8m | 65% |
| Other | CN¥2.5m | CN¥2.6m | 35% |
| Total Compensation | CN¥7.3m | CN¥7.3m | 100% |
On an industry level, roughly 67% of total compensation represents salary and 33% is other remuneration. Far East Horizon is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.
Far East Horizon Limited's Growth
Far East Horizon Limited has seen its earnings per share (EPS) increase by 11% a year over the past three years. It saw its revenue drop 2.5% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Far East Horizon Limited Been A Good Investment?
Most shareholders would probably be pleased with Far East Horizon Limited for providing a total return of 38% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As previously discussed, Fanxing is compensated close to the median for companies of its size, and which belong to the same industry. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Fanxing is compensated rather modestly, given the solid company performance! Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Far East Horizon you should be aware of, and 1 of them doesn't sit too well with us.
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.
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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. 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.
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About SEHK:3360
Far East Horizon
Provides various financial services in Mainland China, Hong Kong, and internationally.
6 star dividend payer and undervalued.
