In 2010 Charles Li was appointed CEO of Hong Kong Exchanges and Clearing Limited (HKG:388). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Charles Li's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Hong Kong Exchanges and Clearing Limited has a market cap of HK$341b, and reported total annual CEO compensation of HK$52m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$9.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over HK$62b, we found that their median CEO total compensation was HK$8.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Charles Li is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Hong Kong Exchanges and Clearing Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Hong Kong Exchanges and Clearing has changed from year to year.
Is Hong Kong Exchanges and Clearing Limited Growing?
On average over the last three years, Hong Kong Exchanges and Clearing Limited has grown earnings per share (EPS) by 18% each year (using a line of best fit). It achieved revenue growth of 2.5% over the 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. Shareholders might be interested in this free visualization of analyst forecasts.
Has Hong Kong Exchanges and Clearing Limited Been A Good Investment?
Boasting a total shareholder return of 55% over three years, Hong Kong Exchanges and Clearing Limited has done well by shareholders. 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.
We examined the amount Hong Kong Exchanges and Clearing Limited pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying Hong Kong Exchanges and Clearing shares with their own money (free access).
If you want to buy a stock that is better than Hong Kong Exchanges and Clearing, this free list of high return, low debt companies is a great place to look.
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