In 2005 Zhilin Li was appointed CEO of China Pharma Holdings, Inc. (NYSEMKT:CPHI). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. 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 Zhilin Li's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that China Pharma Holdings, Inc. has a market cap of US$18m, and reported total annual CEO compensation of US$242k for the year to December 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$226k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$604k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where China Pharma Holdings stands. On an industry level, roughly 32% of total compensation represents salary and 68% is other remuneration. It's interesting to note that China Pharma Holdings pays out a greater portion of remuneration through salary, in comparison to the wider industry.
At first glance this seems like a real positive for shareholders, since Zhilin Li is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see, below, how CEO compensation at China Pharma Holdings has changed over time.
Is China Pharma Holdings, Inc. Growing?
On average over the last three years, China Pharma Holdings, Inc. has shrunk earnings per share by 12% each year (measured with a line of best fit). Its revenue is down 11% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has China Pharma Holdings, Inc. Been A Good Investment?
I think that the total shareholder return of 53%, over three years, would leave most China Pharma Holdings, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that China Pharma Holdings, Inc. remunerates its CEO below most similar sized companies.
Zhilin Li is paid less than CEOs of similar size companies. While the company isn't growing on our analysis, shareholder returns have been good in recent years. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. On another note, we've spotted 3 warning signs for China Pharma Holdings that investors should look into moving forward.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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