In 2009 Lei Liu was appointed CEO of China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Lei Liu’s Compensation Compare With Similar Sized Companies?
Our data indicates that China Jo-Jo Drugstores, Inc. is worth US$65m, and total annual CEO compensation is US$2.5m. (This figure is for the year to 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$54k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$307k.
As you can see, Lei Liu is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean China Jo-Jo Drugstores, Inc. is paying too much. 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 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 105% a year, over the last three years. In the last year, its revenue is up 18%.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 China Jo-Jo Drugstores, Inc. Been A Good Investment?
China Jo-Jo Drugstores, Inc. has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We examined the amount China Jo-Jo Drugstores, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don’t think the CEO pay is too low. So you may want to check if insiders are buying China Jo-Jo Drugstores shares with their own money (free access).
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.