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Is IT Tech Packaging, Inc.'s (NYSEMKT:ITP) CEO Being Overpaid?

Simply Wall St

In 2007 Zhenyong Liu was appointed CEO of IT Tech Packaging, Inc. (NYSEMKT:ITP). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for IT Tech Packaging

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

Our data indicates that IT Tech Packaging, Inc. is worth US$22m, and total annual CEO compensation was reported as US$124k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$36k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$502k.

Most shareholders would consider it a positive that Zhenyong Liu takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at IT Tech Packaging, below.

AMEX:ITP CEO Compensation, December 10th 2019

Is IT Tech Packaging, Inc. Growing?

IT Tech Packaging, Inc. has reduced its earnings per share by an average of 102% a year, over the last three years (measured with a line of best fit). Its revenue is up 12% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has IT Tech Packaging, Inc. Been A Good Investment?

Since shareholders would have lost about 21% over three years, some IT Tech Packaging, Inc. shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It looks like IT Tech Packaging, Inc. pays its CEO less than similar sized companies.

The compensation paid to Zhenyong Liu is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. So you may want to check if insiders are buying IT Tech Packaging shares with their own money (free access).

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.

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.

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. Thank you for reading.