What Did Luzhou Xinglu Water (Group)'s (HKG:2281) CEO Take Home Last Year?

This article will reflect on the compensation paid to Xingyue Liao who has served as CEO of Luzhou Xinglu Water (Group) Co., Ltd. (HKG:2281) since 2015. This analysis will also assess whether Luzhou Xinglu Water (Group) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Luzhou Xinglu Water (Group)

How Does Total Compensation For Xingyue Liao Compare With Other Companies In The Industry?

According to our data, Luzhou Xinglu Water (Group) Co., Ltd. has a market capitalization of HK$903m, and paid its CEO total annual compensation worth CN¥655k over the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥178k.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was CN¥2.0m. In other words, Luzhou Xinglu Water (Group) pays its CEO lower than the industry median.

On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. Luzhou Xinglu Water (Group) 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.

Luzhou Xinglu Water (Group) Co., Ltd.'s Growth

Luzhou Xinglu Water (Group) Co., Ltd. has seen its earnings per share (EPS) increase by 14% a year over the past three years. It achieved revenue growth of 82% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Luzhou Xinglu Water (Group) Co., Ltd. Been A Good Investment?

With a three year total loss of 30% for the shareholders, Luzhou Xinglu Water (Group) Co., Ltd. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Luzhou Xinglu Water (Group) Co., Ltd. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth over three years is certainly impressive. Considering EPS are on the up, we would say Xingyue is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Luzhou Xinglu Water (Group) (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Luzhou Xinglu Water (Group), 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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