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Is Oversea-Chinese Banking Corporation Limited's (SGX:O39) CEO Being Overpaid?

Simply Wall St

In 2012 Samuel Tsien was appointed CEO of Oversea-Chinese Banking Corporation Limited (SGX:O39). First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. 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 Oversea-Chinese Banking

How Does Samuel Tsien's Compensation Compare With Similar Sized Companies?

Our data indicates that Oversea-Chinese Banking Corporation Limited is worth S$47b, and total annual CEO compensation was reported as S$11m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at S$1.2m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over S$11b and the median CEO total compensation was S$5.7m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

It would therefore appear that Oversea-Chinese Banking Corporation Limited pays Samuel Tsien more than the median CEO remuneration at large companies, 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, below, how CEO compensation at Oversea-Chinese Banking has changed over time.

SGX:O39 CEO Compensation, December 10th 2019

Is Oversea-Chinese Banking Corporation Limited Growing?

On average over the last three years, Oversea-Chinese Banking Corporation Limited has grown earnings per share (EPS) by 10% each year (using a line of best fit). In the last year, its revenue is down 3.3%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

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

With a total shareholder return of 30% over three years, Oversea-Chinese Banking Corporation Limited shareholders would, in general, be reasonably content. 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 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.

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. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Oversea-Chinese Banking.

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.

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.

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. Thank you for reading.