How Should Investors React To Asia Financial Holdings Limited’s (HKG:662) CEO Pay?

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Bernard Chan is the CEO of Asia Financial Holdings Limited (HKG:662). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

View our latest analysis for Asia Financial Holdings

How Does Bernard Chan’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Asia Financial Holdings Limited has a market cap of HK$4.3b, and is paying total annual CEO compensation of HK$9.1m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$5.0m. We looked at a group of companies with market capitalizations from HK$1.6b to HK$6.3b, and the median CEO total compensation was HK$2.3m.

It would therefore appear that Asia Financial Holdings Limited pays Bernard Chan 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Asia Financial Holdings, below.

SEHK:662 CEO Compensation, July 18th 2019
SEHK:662 CEO Compensation, July 18th 2019

Is Asia Financial Holdings Limited Growing?

Asia Financial Holdings Limited has increased its earnings per share (EPS) by an average of 22% a year, over the last three years (using a line of best fit). Its revenue is down -23% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end.

Has Asia Financial Holdings Limited Been A Good Investment?

Asia Financial Holdings Limited has served shareholders reasonably well, with a total return of 12% over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

We examined the amount Asia Financial Holdings 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.

However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. Shareholders may want to check for free if Asia Financial Holdings insiders are buying or selling shares.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.