In 2007 Zhenyong Liu was appointed CEO of IT Tech Packaging, Inc. (NYSEMKT:ITP). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Zhenyong Liu’s Compensation Compare With Similar Sized Companies?
According to our data, IT Tech Packaging, Inc. has a market capitalization of US$19m, and paid its CEO total annual compensation worth US$124k over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$36k. Importantly, there may be performance hurdles relating to the non-salary component 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$515k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less 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.
Is IT Tech Packaging, Inc. Growing?
Over the last three years IT Tech Packaging, Inc. has shrunk its earnings per share by an average of 102% per year (measured with a line of best fit). It achieved revenue growth of 12% over the last year.
Few shareholders would be pleased to read that earnings per share are lower 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 might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has IT Tech Packaging, Inc. Been A Good Investment?
With a three year total loss of 20%, IT Tech Packaging, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
IT Tech Packaging, Inc. is currently paying its CEO below what is normal for companies of its size.
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). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. 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 email@example.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.
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