HKEx chief executive Charles Li has his contract renewed for three years

Charles Li's base salary will rise to HK$8m, but the next term will bring many challenges

PUBLISHED : Thursday, 13 September, 2012, 12:00am
UPDATED : Thursday, 13 September, 2012, 3:06am

Hong Kong Exchanges and Clearing has renewed the contract of its chief executive, Charles Li Xiaojia, for three years until October 2015.

His base salary will rise to HK$8 million a year. This is a 6.38 per cent increase from the HK$7.52 million per year in his last contract. But his total compensation last year was HK$23.07 million, including a HK$7.5 million performance bonus, shares and housing and retirement benefits.

"This compensation package was determined having given consideration to the level of responsibility, experience and abilities required of the chief executive and the remuneration offered for similar positions in the financial industry," HKEx said.

The renewal of Li's contract came as no surprise to the market, as brokers expected that the bourse would like him to stay on for many continuing projects, including the launch of yuan currency futures on Monday and the acquisition of the London Metal Exchange, awaiting regulatory approval in November.

Li, 51, who was born in Beijing but has lived in Hong Kong for 18 years, worked for an oil company and as a journalist before becoming a lawyer and then a banker. He was the chairman of JP Morgan's China division before joining the exchange as its chief in October 2009.

Brokers consider Li a reformer. He has attracted more listings from international firms and made Hong Kong the world's largest market worldwide for initial public offerings in the past three years.

Despite street protests by brokers, Li extended trading to 51/2 hours from four by opening the market 30 minutes earlier and halving the two-hour lunch break.

Li also led HKEx in its first overseas acquisition, entering the commodities trading arena by spending £1.39 billion (HK$17.3 billion) to buy the LME, the world's largest metal exchange.

Brokers said that, at 180 times last year's earnings, the price was too high.

Li, however, said: "Any transaction has a price and involves taking some risks. However, the deal may prove to be value for money in the long term. The biggest risk for the HKEx is for us to sit there and do nothing."

The new three-year term will not be easy for Li, as turnover on the exchange and the number of IPOs have slumped this year.

Meanwhile, HKEx said it had obtained approval from mainland authorities to establish a subsidiary, Ganghui Financial Information Services (Shanghai), which will launch a market data hub in Shanghai in next year's third quarter.

The project is part of Li's push to upgrade HKEx's trading, clearing and market data distribution platform.