What Can We Make Of Oversea-Chinese Banking's (SGX:O39) CEO Compensation?

This article will reflect on the compensation paid to Samuel Tsien who has served as CEO of Oversea-Chinese Banking Corporation Limited (SGX:O39) since 2012. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Oversea-Chinese Banking.

Check out our latest analysis for Oversea-Chinese Banking

Comparing Oversea-Chinese Banking Corporation Limited's CEO Compensation With the industry

Our data indicates that Oversea-Chinese Banking Corporation Limited has a market capitalization of S$45b, and total annual CEO compensation was reported as S$11m for the year to December 2019. That's just a smallish increase of 3.5% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at S$1.2m.

For comparison, other companies in the industry with market capitalizations above S$11b, reported a median total CEO compensation of S$695k. Hence, we can conclude that Samuel Tsien is remunerated higher than the industry median. Furthermore, Samuel Tsien directly owns S$20m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. Oversea-Chinese Banking sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Oversea-Chinese Banking Corporation Limited's Growth

Oversea-Chinese Banking Corporation Limited's earnings per share (EPS) grew 4.4% per year over the last three years. In the last year, its revenue is down 8.6%.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

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

Given the total shareholder loss of 7.8% over three years, many shareholders in Oversea-Chinese Banking Corporation Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Samuel is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing for Oversea-Chinese Banking, and although EPS growth is steady, it hasn't set the world on fire. This doesn't look good when you see that Samuel is earning more than the industry median. All things considered, we believe shareholders would be disappointed to see Samuel's compensation grow without first seeing an improvement in the performance of the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Oversea-Chinese Banking that you should be aware of before investing.

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

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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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