Does Nelco's (NSE:NELCO) CEO Salary Compare Well With Industry Peers?

This article will reflect on the compensation paid to Pradip Nath who has served as CEO of Nelco Limited (NSE:NELCO) since 2011. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Nelco

How Does Total Compensation For Pradip Nath Compare With Other Companies In The Industry?

According to our data, Nelco Limited has a market capitalization of ₹4.7b, and paid its CEO total annual compensation worth ₹27m over the year to March 2020. Notably, that's an increase of 17% over the year before. We note that the salary portion, which stands at ₹15.3m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.0m. This suggests that Pradip Nath is paid more than the median for the industry.

On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. In Nelco's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Nelco Limited's Growth

Nelco Limited's earnings per share (EPS) grew 26% per year over the last three years. In the last year, its revenue is up 16%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Nelco Limited Been A Good Investment?

Most shareholders would probably be pleased with Nelco Limited for providing a total return of 143% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we touched on above, Nelco Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, Nelco has produced strong earnings growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Pradip's performance creates value for the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Nelco (1 is a bit unpleasant!) that you should be aware of before investing here.

Switching gears from Nelco, 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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