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Should You Worry About Merdeka Financial Group Limited's (HKG:8163) CEO Salary Level?

Simply Wall St

Wilson Cheung became the CEO of Merdeka Financial Group Limited (HKG:8163) in 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Merdeka Financial Group

How Does Wilson Cheung's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Merdeka Financial Group Limited has a market cap of HK$32m, and reported total annual CEO compensation of HK$3.9m for the year to December 2018. Notably, the salary of HK$3.9m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.8m.

As you can see, Wilson Cheung is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Merdeka Financial Group Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Merdeka Financial Group has changed from year to year.

SEHK:8163 CEO Compensation, January 16th 2020

Is Merdeka Financial Group Limited Growing?

Over the last three years Merdeka Financial Group Limited has grown its earnings per share (EPS) by an average of 5.7% per year (using a line of best fit). It achieved revenue growth of 4.2% over the last year.

I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Merdeka Financial Group Limited Been A Good Investment?

With a three year total loss of 87%, Merdeka Financial Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Merdeka Financial Group Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. So you may want to check if insiders are buying Merdeka Financial Group shares with their own money (free access).

Important note: Merdeka Financial 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.

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.