Qingbin Liu became the CEO of LUZHENG FUTURES Company Limited (HKG:1461) in 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Qingbin Liu's Compensation Compare With Similar Sized Companies?
According to our data, LUZHENG FUTURES Company Limited has a market capitalization of HK$511m, and paid its CEO total annual compensation worth CN¥1.2m over the year to December 2019. Notably, the salary of CN¥1.2m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO total compensation was CN¥1.6m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 75% of total compensation out of all the companies we analysed, while other remuneration made up 25% of the pie. LUZHENG FUTURES pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay.
That means Qingbin Liu receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see a visual representation of the CEO compensation at LUZHENG FUTURES, below.
Is LUZHENG FUTURES Company Limited Growing?
On average over the last three years, LUZHENG FUTURES Company Limited has shrunk earnings per share by 30% each year (measured with a line of best fit). Its revenue is down 15% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has LUZHENG FUTURES Company Limited Been A Good Investment?
Given the total loss of 65% over three years, many shareholders in LUZHENG FUTURES Company Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
Qingbin Liu is paid around what is normal for the leaders of comparable size companies.
After looking at EPS and total shareholder returns, it's certainly hard to argue the company has performed well, since both metrics are down. Suffice it to say, we don't think the CEO is underpaid! Taking a breather from CEO compensation, we've spotted 4 warning signs for LUZHENG FUTURES (of which 1 makes us a bit uncomfortable!) you should know about in order to have a holistic understanding of the stock.
Important note: LUZHENG FUTURES 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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