John Lee is the CEO of Lippo Limited (HKG:226), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lippo.
Check out our latest analysis for Lippo
How Does Total Compensation For John Lee Compare With Other Companies In The Industry?
At the time of writing, our data shows that Lippo Limited has a market capitalization of HK$1.1b, and reported total annual CEO compensation of HK$14m for the year to March 2020. That's a notable decrease of 16% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$1.4m.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.3m. This suggests that John Lee is paid more than the median for the industry. Moreover, John Lee also holds HK$2.3m worth of Lippo stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$1.4m | HK$1.4m | 10% |
| Other | HK$13m | HK$15m | 90% |
| Total Compensation | HK$14m | HK$17m | 100% |
On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Lippo sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Lippo Limited's Growth Numbers
Over the last three years, Lippo Limited has shrunk its earnings per share by 65% per year. It saw its revenue drop 56% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Lippo Limited Been A Good Investment?
Since shareholders would have lost about 45% over three years, some Lippo Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we noted earlier, Lippo pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Lippo we think you should know about.
Switching gears from Lippo, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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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About SEHK:226
Lippo
An investment holding company, engages in the food manufacturing and retail operations through chains of cafés and bistros in Hong Kong, Mainland China, Singapore, Malaysia, Indonesia, and internationally.
Slightly overvalued with worrying balance sheet.
