In 2009 Lei Liu was appointed CEO of China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD). 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Lei Liu's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that China Jo-Jo Drugstores, Inc. has a market cap of US$38m, and is paying total annual CEO compensation of US$54k. (This is based on the year to March 2019). That's actually a decrease on the year before. Notably, the salary of US$54k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$474k.
A first glance this seems like a real positive for shareholders, since Lei Liu is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at China Jo-Jo Drugstores has changed over time.
Is China Jo-Jo Drugstores, Inc. Growing?
China Jo-Jo Drugstores, Inc. has reduced its earnings per share by an average of 39% a year, over the last three years (measured with a line of best fit). Its revenue is up 13% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has China Jo-Jo Drugstores, Inc. Been A Good Investment?
Since shareholders would have lost about 36% over three years, some China Jo-Jo Drugstores, Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
It looks like China Jo-Jo Drugstores, Inc. pays its CEO less than similar sized companies.
Shareholders should note that compensation for Lei Liu is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at China Jo-Jo Drugstores.
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.
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