In 2003 Dian Liu was appointed CEO of Luye Pharma Group Ltd. (HKG:2186). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Dian Liu's Compensation Compare With Similar Sized Companies?
Our data indicates that Luye Pharma Group Ltd. is worth HK$17b, and total annual CEO compensation was reported as CN¥3.9m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥3.4m. When we examined a selection of companies with market caps ranging from CN¥6.9b to CN¥22b, we found the median CEO total compensation was CN¥3.9m.
That means Dian Liu receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Luye Pharma Group has changed from year to year.
Is Luye Pharma Group Ltd. Growing?
Over the last three years Luye Pharma Group Ltd. has grown its earnings per share (EPS) by an average of 23% per year (using a line of best fit). Its revenue is up 46% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Luye Pharma Group Ltd. Been A Good Investment?
With a total shareholder return of 3.3% over three years, Luye Pharma Group Ltd. has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
Dian Liu is paid around the same as most CEOs of similar size companies.
Shareholder returns could be better but shareholders would be pleased with the positive EPS growth. So considering these factors, we think the CEO pay is probably quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Luye Pharma Group.
Important note: Luye Pharma 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.
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