The CEO of China Lilang Limited (HKG:1234) is Liang Wang. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Liang Wang’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that China Lilang Limited has a market cap of HK$5.4b, and reported total annual CEO compensation of CN¥1.3m for the year to December 2019. Notably, the salary of CN¥1.3m is the vast majority of the CEO compensation. When we examined a selection of companies with market caps ranging from CN¥2.8b to CN¥11b, we found the median CEO total compensation was CN¥3.5m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. China Lilang is focused on going down a more traditional approach and is paying a higher proportion of compensation through salary, as compared to non-salary benefits.
At first glance this seems like a real positive for shareholders, since Liang Wang is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business. The graphic below shows how CEO compensation at China Lilang has changed from year to year.
Is China Lilang Limited Growing?
On average over the last three years, China Lilang Limited has seen earnings per share (EPS) move in a favourable direction by 16% each year (using a line of best fit). In the last year, its revenue is up 15%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has China Lilang Limited Been A Good Investment?
China Lilang Limited has served shareholders reasonably well, with a total return of 11% over three years. 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.
It appears that China Lilang Limited remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. While returns over the last few years haven’t been top notch, there is nothing to suggest to us that Liang Wang is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But for me, it’s even better if insiders are also buying shares with their own cold, hard, cash. On another note, we’ve spotted 2 warning signs for China Lilang that investors should look into moving forward.
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.
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