Ming Chung Liu became the CEO of Nine Dragons Paper (Holdings) Limited (HKG:2689) in 2006. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Nine Dragons Paper (Holdings)

How Does Ming Chung Liu's Compensation Compare With Similar Sized Companies?

Our data indicates that Nine Dragons Paper (Holdings) Limited is worth HK$31b, and total annual CEO compensation was reported as CN¥9.9m for the year to June 2019. When we examined a selection of companies with market caps ranging from CN¥14b to CN¥45b, we found the median CEO total compensation was CN¥3.9m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Nine Dragons Paper (Holdings) stands. Speaking on an industry level, we can see that nearly 23% of total compensation represents salary, while the remainder of 77% is other remuneration. Nine Dragons Paper (Holdings) sets aside a smaller share of compensation for salary, in comparison to the overall industry.

As you can see, Ming Chung Liu is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Nine Dragons Paper (Holdings) Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Nine Dragons Paper (Holdings) has changed over time.

Is Nine Dragons Paper (Holdings) Limited Growing?

Over the last three years, Nine Dragons Paper (Holdings) Limited has not seen its earnings per share change much, though there is a positive trend. It saw its revenue drop 7.5% over the last year.

I would prefer it if there was revenue growth, but it is good to see modest EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Nine Dragons Paper (Holdings) Limited Been A Good Investment?

Given the total loss of 14% over three years, many shareholders in Nine Dragons Paper (Holdings) 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...

We compared total CEO remuneration at Nine Dragons Paper (Holdings) Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Nine Dragons Paper (Holdings) that you should be aware of before investing.

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.

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.

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