Samuel Tsien became the CEO of Oversea-Chinese Banking Corporation Limited (SGX:O39) in 2012. This analysis aims first to contrast CEO compensation with other large 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 method should give us information to assess how appropriately the company pays the CEO.
How Does Samuel Tsien’s Compensation Compare With Similar Sized Companies?
According to our data, Oversea-Chinese Banking Corporation Limited has a market capitalization of S$50b, and pays its CEO total annual compensation worth S$11m. (This figure is for the year to December 2018). That’s a notable increase of 10% on last year. We think total compensation is more important but we note that the CEO salary is lower, at S$1.2m. We looked at a group of companies with market capitalizations over S$11b and the median CEO total compensation was S$6.0m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
As you can see, Samuel Tsien is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Oversea-Chinese Banking Corporation Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Oversea-Chinese Banking has changed from year to year.
Is Oversea-Chinese Banking Corporation Limited Growing?
Over the last three years Oversea-Chinese Banking Corporation Limited has grown its earnings per share (EPS) by an average of 8.1% per year (using a line of best fit). In the last year, its revenue is up 5.0%.
I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Oversea-Chinese Banking Corporation Limited Been A Good Investment?
Boasting a total shareholder return of 47% over three years, Oversea-Chinese Banking Corporation Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We examined the amount Oversea-Chinese Banking Corporation Limited pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years returns to investors have been great, though we might have liked stronger business growth. As a result of the juicy return to investors, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Oversea-Chinese Banking (free visualization of insider trades).
Important note: Oversea-Chinese Banking may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.