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Does Hong Leong Finance Limited's (SGX:S41) CEO Pay Reflect Performance?

Simply Wall St

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In 1979 Leng Beng Kwek was appointed CEO of Hong Leong Finance Limited (SGX:S41). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Hong Leong Finance

How Does Leng Beng Kwek's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Hong Leong Finance Limited has a market cap of S$1.2b, and is paying total annual CEO compensation of S$2.8m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at S$1.1m. We looked at a group of companies with market capitalizations from S$543m to S$2.2b, and the median CEO total compensation was S$82k.

It would therefore appear that Hong Leong Finance Limited pays Leng Beng Kwek 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 Hong Leong Finance, below.

SGX:S41 CEO Compensation, July 17th 2019

Is Hong Leong Finance Limited Growing?

Over the last three years Hong Leong Finance Limited has grown its earnings per share (EPS) by an average of 26% per year (using a line of best fit). It achieved revenue growth of 17% over the last year.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hong Leong Finance Limited Been A Good Investment?

Boasting a total shareholder return of 41% over three years, Hong Leong Finance Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared total CEO remuneration at Hong Leong Finance Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. 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 Leong Finance shares with their own money (free access).

Important note: Hong Leong Finance 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.

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.