A Quick Analysis On China Green Agriculture's (NYSE:CGA) CEO Compensation
Richard Li has been the CEO of China Green Agriculture, Inc. (NYSE:CGA) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for China Green Agriculture.
Check out our latest analysis for China Green Agriculture
How Does Total Compensation For Richard Li Compare With Other Companies In The Industry?
Our data indicates that China Green Agriculture, Inc. has a market capitalization of US$34m, and total annual CEO compensation was reported as US$420k for the year to June 2020. That's just a smallish increase of 4.5% on last year. Notably, the salary which is US$300.0k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$389k. So it looks like China Green Agriculture compensates Richard Li in line with the median for the industry. Furthermore, Richard Li directly owns US$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$300k | US$300k | 71% |
Other | US$120k | US$102k | 29% |
Total Compensation | US$420k | US$402k | 100% |
On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. China Green Agriculture is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
China Green Agriculture, Inc.'s Growth
Over the last three years, China Green Agriculture, Inc. has shrunk its earnings per share by 114% per year. It saw its revenue drop 15% over the last year.
Overall this is not a very positive result for shareholders. 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. 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 Green Agriculture, Inc. Been A Good Investment?
With a three year total loss of 67% for the shareholders, China Green Agriculture, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we touched on above, China Green Agriculture, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for China Green Agriculture you should be aware of, and 2 of them don't sit too well with us.
Important note: China Green Agriculture is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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