Hong Kong bourse CEO Charles Li’s 2016 bonus cut by 25 per cent as market slumps

Charles Li Xiaojia’s bonus was reduced by a quarter last year as a plunge in stock market trading volumes hit HKEX’s profits

PUBLISHED : Wednesday, 26 April, 2017, 8:01am
UPDATED : Wednesday, 26 April, 2017, 8:37am

Charles Li Xiaojia, the highest paid among Hong Kong’s financial regulators, had his 2016 bonus cut by a quarter because of lower turnover in the city’s stock market.

Li, chief executive of Hong Kong Exchanges & Clearing Ltd., received a performance bonus of HK$11.25 million (US$1.45 million) for 2016, down 25 per cent from HK$15 million a year earlier, according to the local bourse’s annual report. His 2015 bonus was 27 per cent higher than in 2014.

The former JPMorgan banker, however, still took home a total of HK$44 million last year, down only 2.6 per cent from 2015. The amount includes a HK$9 million basic salary, HK$11.25 million bonus and HK$22.47 million in stock options he holds.

The HK$22.47 million in stock was up 13 per cent from HK$19.92 million in 2015. His annual salary of HK$9 million remained unchanged.

It’s the duty of the HKEX chief executive to think of ways to improve turnover, and to enhance the financial performance of the bourse
Benny Mau, chairman, Hong Kong Securities Association

The cut to Li’s performance bonus came as the local stock exchange reported a worse-than-expected 27 per cent drop in 2016 annual profit to HK$5.77 billion. The lower figure resulted from a plunge in average daily market turnover to a three-year low of HK$66.9 billion, 37 per cent lower than HK$105.63 billion in 2015.

Even the much-anticipated Shenzhen-Hong Kong Stock Connect programme which commenced in December failed to boosted turnover on the exchange.

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Hong Kong saw US$39.4 billion raised on its bourse last year, 57 per cent less than in 2015, even as the city remained the world’s largest market for initial public offerings for the second year, according to Thomson Reuters data.

“It’s the duty of the HKEX chief executive to think of ways to improve turnover, and to enhance the financial performance of the bourse,” said Benny Mau, chairman of the Hong Kong Securities Association. “When the bourse’s profit is down, it’s natural that the bonus of the CEO and senior managers will be affected.”

Even with his bonus reduced, Li remained the highest paid regulator. The Hong Kong Monetary Authority said its highest paid employee – most likely chief executive Norman Chan – received between HK$10 million and HK$10.5 million in 2015, a raise of 5 per cent from 2014. That makes Chan the second highest paid regulator in Hong Kong.

Securities & Futures Commission chief executive Ashley Alder is the city’s third highest paid regulator. After a 3.4 per cent increase, his pay package for the financial year ended March 2016 rose to HK$9.73 million, comprising HK$6.8 million in base salary, a discretionary bonus of HK$2.25 million, plus HK$680,000 in retirement benefits.