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This article will reflect on the compensation paid to Lei Liu who has served as CEO of China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD) since 2009. This analysis will also assess whether China Jo-Jo Drugstores pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Lei Liu Compare With Other Companies In The Industry?
At the time of writing, our data shows that China Jo-Jo Drugstores, Inc. has a market capitalization of US$37m, and reported total annual CEO compensation of US$69k for the year to March 2020. We note that's an increase of 28% above last year. Notably, the salary of US$69k is the entirety of the CEO compensation.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$499k. This suggests that Lei Liu is paid below the industry median. What's more, Lei Liu holds US$2.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Speaking on a company level, China Jo-Jo Drugstores prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at China Jo-Jo Drugstores, Inc.'s Growth Numbers
China Jo-Jo Drugstores, Inc.'s earnings per share (EPS) grew 50% per year over the last three years. Its revenue is up 12% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has China Jo-Jo Drugstores, Inc. Been A Good Investment?
Given the total shareholder loss of 37% over three years, many shareholders in China Jo-Jo Drugstores, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
China Jo-Jo Drugstores rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, China Jo-Jo Drugstores pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. Considering EPS are on the up, we would say Lei is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for China Jo-Jo Drugstores (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from China Jo-Jo Drugstores, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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