Stock Analysis

A Quick Analysis On Asia Financial Holdings' (HKG:662) CEO Salary

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Bernard Chan is the CEO of Asia Financial Holdings Limited (HKG:662), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Asia Financial Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

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Comparing Asia Financial Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Asia Financial Holdings Limited has a market capitalization of HK$3.5b, and reported total annual CEO compensation of HK$6.8m for the year to December 2019. That's a notable decrease of 21% on last year. In particular, the salary of HK$5.20m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of HK$5.1m. Hence, we can conclude that Bernard Chan is remunerated higher than the industry median. Moreover, Bernard Chan also holds HK$7.1m worth of Asia Financial Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary HK$5.2m HK$5.0m 76%
Other HK$1.6m HK$3.7m 24%
Total CompensationHK$6.8m HK$8.6m100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. Asia Financial Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

SEHK:662 CEO Compensation December 1st 2020

A Look at Asia Financial Holdings Limited's Growth Numbers

Over the last three years, Asia Financial Holdings Limited has shrunk its earnings per share by 35% per year. In the last year, its revenue is down 9.4%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Asia Financial Holdings Limited Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Asia Financial Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Asia Financial Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Asia Financial Holdings that investors should think about before committing capital to this stock.

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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