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Is The Hongkong and Shanghai Hotels, Limited (HKG:45) Excessively Paying Its CEO?
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In 2002 Clement Kwok was appointed CEO of The Hongkong and Shanghai Hotels, Limited (HKG:45). 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. 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.

Check out our latest analysis for Hongkong and Shanghai Hotels

How Does Clement Kwok’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that The Hongkong and Shanghai Hotels, Limited has a market cap of HK$14b, and reported total annual CEO compensation of HK$17m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$7.0m. We examined companies with market caps from HK$7.8b to HK$25b, and discovered that the median CEO total compensation of that group was HK$3.8m.

Thus we can conclude that Clement Kwok receives more in total compensation than the median of a group of companies in the same market, and of similar size to The Hongkong and Shanghai Hotels, Limited. However, this doesn’t necessarily mean the pay 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 Hongkong and Shanghai Hotels has changed over time.

SEHK:45 CEO Compensation, November 13th 2019

Is The Hongkong and Shanghai Hotels, Limited Growing?

The Hongkong and Shanghai Hotels, Limited has increased its earnings per share (EPS) by an average of 14% a year, over the last three years (using a line of best fit). Its revenue is up 2.0% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.

Has The Hongkong and Shanghai Hotels, Limited Been A Good Investment?

With a total shareholder return of 8.2% over three years, The Hongkong and Shanghai Hotels, Limited has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared total CEO remuneration at The Hongkong and Shanghai Hotels, Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Hongkong and Shanghai Hotels.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 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.

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