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Is Hong Kong Finance Group Limited's (HKG:1273) CEO Pay Justified?

Simply Wall St

Dickson Tse became the CEO of Hong Kong Finance Group Limited (HKG:1273) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

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See our latest analysis for Hong Kong Finance Group

How Does Dickson Tse's Compensation Compare With Similar Sized Companies?

Our data indicates that Hong Kong Finance Group Limited is worth HK$228m, and total annual CEO compensation is HK$1.8m. (This figure is for the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at HK$1.2m. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.5m.

That means Dickson Tse receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Hong Kong Finance Group, below.

SEHK:1273 CEO Compensation, May 21st 2019

Is Hong Kong Finance Group Limited Growing?

Hong Kong Finance Group Limited has increased its earnings per share (EPS) by an average of 1.2% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 39%.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. So while I'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! 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 Hong Kong Finance Group Limited Been A Good Investment?

With a three year total loss of 22%, Hong Kong Finance Group Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Dickson Tse is paid around what is normal the leaders of comparable size companies.

The company cannot boast particularly strong per share growth. And we think the shareholder returns - over three years - have been underwhelming. So many would argue that the CEO is certainly not underpaid. Whatever your view on compensation, you might want to check if insiders are buying or selling Hong Kong Finance Group shares (free trial).

Important note: Hong Kong Finance Group 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.