Hong Kong’s biggest corporate chieftains are better off than shareholders as median executive pay outstrips stock performance

• Hong Kong chief executives have enjoyed significant gains from 2014 to 2018, with remuneration rising 117 per cent, outpacing the 28 per cent gain in stock prices in the same companies over the period
• Tencent’s President Martin Lau is the highest-paid among the CEOs of Hong Kong-listed companies, getting 313.47 million yuan in 2018

Corporate chieftains in Hong Kong, the world's most expensive city to live and work in, are far better off than their shareholders, as their remuneration packages have ballooned at a faster rate than their companies' share performances in the past five years, according to a study.

The median CEO's pay package soared 117 per cent between 2014 and 2018 for 142 companies with at least HK$25 billion (US$3.2 billion) each in market capitalisation, according to Comptify Analytics, a research firm that analyses human resources data. The stock prices of these companies rose by just 28 per cent on average over the period.

The outsize reward packages, comprising basic pay, bonuses, stock options and incentive plans, underscore the top dollar that companies have to pay to retain their top talent.

"The pay for Hong Kong CEOs (are) still lower than the top-tier companies listed in New York or London because the companies are usually more internationalised and therefore are bigger, which is correlated to pay level," said Comptify's managing consultant Vincent Fung, adding that pay levels "accelerate exponentially" with market value.

The median remuneration of Hong Kong's mega corporations was HK$15.5 million per year, while mid-cap companies " those valued at between HK$2.5 billion and HK$10 billion " took home HK$6 million, and small-cap CEOs were paid HK$3.8 million, Comptify said.

Base pay salary rose for large-cap CEOs grew 43 per cent from 2014 to 2018, compared with the 1.2 per cent increment for Hong Kong's mid-level management and professionals last year, according to government data.

The outsize pay also comes amid widening wealth gap in Hong Kong, as the richest 10 per cent of households " with a median monthly income of HK$112,450 " earned 44 times more than the poorest 10 per cent making an average of HK$2,560, according to 2016 data.

Tencent Holdings' President Martin Lau Chi Ping was the highest-paid CEO among Hong Kong-listed companies, with his total package increasing fourfold to 313.47 million yuan (US$45.4 million) from 2014 to 2018, compared with a 186-per cent jump in share price since August 2014.

Tencent, China's largest games publisher and social network operator, has been the most generous employer for years, paying at least three senior executives more than HK$180 million each as early as 2015. The Shenzhen-based company's 2016 CEO salaries left Apple, Amazon and IBM in the dust.

Pony Ma Huateng, Tencent's founder and chairman, is estimated to be worth US$37.6 billion and is excluded from the study.

Canning Fok Kin Ning, the co-managing director of CK Hutchison Holdings, was unseated in 2015 as Hong Kong's highest-paid employee. Dubbed the "King of Employees" for decades for his record-setting salary package, Fok was paid HK$226.3 million in 2018 as the city's third-highest paid CEO, according to Comptify. CK Hutchison's share price has fallen 47.5 per cent over the past five years.

Lenovo's CEO since 2009, Yang Yuanching, enjoyed compensation of nearly HK$120 million, while Lenovo's stock price has dropped from HK$10 per share to HK$6.40 per share over the past five years.

China Evergrande, China's second-biggest property developer has seen its share price stagnate, dropping from HK$30 per share in October 2017 after a rapid rise, to HK$21 per share in July this year. Its 11-year chief executive, Xia Haijun recently bought a penthouse at The Pavilia Hill in Tin Hau for HK$155 million. Despite a reported 20 per cent drop in Xia's compensation, he remains one of Hong Kong's five highest-paid CEOs.

Chief Financial Officers of large cap companies saw median pay 66 per cent over the 2014 to 2018 period.

For Mega Cap companies, the CEO pay movement leads other roles in the board, namely CFO and Executive Directors, for the record year " CEO pay rose from HK$13.56 million in 2017 to HK$15.5 million in 2018, a 14 per cent year-on-year increase, compared to 1.6 per cent rise for chief financial officers (CFOs) and 0.5 per cent rise for executive directors.

Hong Kong's composite consumer price index for 2018 rose 2.4 per cent. The Hang Seng Large Cap Index rose just over 18 per cent from July 2014 to July 2018 and has since fallen almost 3 per cent over the past year.

Fung added that compensation for heads of companies in Hong Kong for local employees had now surpassed that of expatriates from the US and Europe by 15.2 per cent in 2018. Median CEO pay for S&P 500 corporations rose by 21 per cent from 2013 to 2017, according to a report by Pay Governance, a US-based executive compensation consultancy.

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