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Is Luye Pharma Group Ltd.'s (HKG:2186) CEO Overpaid Relative To Its Peers?

Simply Wall St

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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Luye Pharma Group

How Does Dian Liu's Compensation Compare With Similar Sized Companies?

According to our data, Luye Pharma Group Ltd. has a market capitalization of HK$19b, and pays its CEO total annual compensation worth CN¥3.9m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at CN¥3.4m. We looked at a group of companies with market capitalizations from CN¥14b to CN¥45b, and the median CEO total compensation was CN¥3.5m.

So Dian Liu receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Luye Pharma Group has changed over time.

SEHK:2186 CEO Compensation, August 21st 2019

Is Luye Pharma Group Ltd. Growing?

Luye Pharma Group Ltd. has increased its earnings per share (EPS) by an average of 20% a year, over the last three years (using a line of best fit). It achieved revenue growth of 36% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Luye Pharma Group Ltd. Been A Good Investment?

With a total shareholder return of 18% over three years, Luye Pharma Group Ltd. shareholders would, in general, be reasonably content. 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.

In Summary...

Dian Liu is paid around the same as most CEOs of similar size companies.

We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. So considering these factors, we think the CEO pay is probably quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Luye Pharma Group (free visualization of insider trades).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.