What Can We Learn About Lippo China Resources' (HKG:156) CEO Compensation?

John Lee has been the CEO of Lippo China Resources Limited (HKG:156) since 2011, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Lippo China Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Lippo China Resources

Comparing Lippo China Resources Limited's CEO Compensation With the industry

According to our data, Lippo China Resources Limited has a market capitalization of HK$1.0b, and paid its CEO total annual compensation worth HK$13m over the year to March 2020. Notably, that's a decrease of 13% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$836k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.4m. This suggests that John Lee is paid more than the median for the industry.

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. In Lippo China Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Lippo China Resources Limited's Growth

Over the last three years, Lippo China Resources Limited has shrunk its earnings per share by 41% per year. In the last year, its revenue is down 60%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Lippo China Resources Limited Been A Good Investment?

Given the total shareholder loss of 37% over three years, many shareholders in Lippo China Resources Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, Lippo China Resources pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Lippo China Resources you should be aware of, and 1 of them doesn't sit too well with us.

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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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