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Why Lee's Pharmaceutical Holdings Limited's (HKG:950) CEO Pay Matters To You

Simply Wall St

Benjamin Li is the CEO of Lee's Pharmaceutical Holdings Limited (HKG:950). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for Lee's Pharmaceutical Holdings

How Does Benjamin Li's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Lee's Pharmaceutical Holdings Limited has a market cap of HK$2.3b, and is paying total annual CEO compensation of HK$13m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$5.8m. We examined companies with market caps from HK$784m to HK$3.1b, and discovered that the median CEO total compensation of that group was HK$2.2m.

Thus we can conclude that Benjamin Li receives more in total compensation than the median of a group of companies in the same market, and of similar size to Lee's Pharmaceutical Holdings Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Lee's Pharmaceutical Holdings has changed over time.

SEHK:950 CEO Compensation, August 13th 2019

Is Lee's Pharmaceutical Holdings Limited Growing?

On average over the last three years, Lee's Pharmaceutical Holdings Limited has grown earnings per share (EPS) by 13% each year (using a line of best fit). It achieved revenue growth of 7.0% over the last year.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.

Has Lee's Pharmaceutical Holdings Limited Been A Good Investment?

Since shareholders would have lost about 34% over three years, some Lee's Pharmaceutical Holdings Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount Lee's Pharmaceutical Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Lee's Pharmaceutical Holdings (free visualization of insider trades).

If you want to buy a stock that is better than Lee's Pharmaceutical Holdings, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.