Is Lippo China Resources Limited's (HKG:156) CEO Salary Justified?

John Lee became the CEO of Lippo China Resources Limited (HKG:156) in 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for Lippo China Resources

How Does John Lee's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Lippo China Resources Limited has a market cap of HK$1.6b, and is paying total annual CEO compensation of HK$3.1m. (This figure is for the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at HK$811k. We examined companies with market caps from HK$783m to HK$3.1b, and discovered that the median CEO total compensation of that group was HK$2.1m.

It would therefore appear that Lippo China Resources Limited pays John Lee more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Lippo China Resources, below.

Is Lippo China Resources Limited Growing?

On average over the last three years, Lippo China Resources Limited has shrunk earnings per share by 57% each year (measured with a line of best fit). It achieved revenue growth of 3.5% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. 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, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Lippo China Resources Limited Been A Good Investment?

Lippo China Resources Limited has generated a total shareholder return of 1.4% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Lippo China Resources Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO underpaid. So you may want to check if insiders are buying Lippo China Resources 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.