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How Much Did IDFC's (NSE:IDFC) CEO Pocket Last Year?
Sunil Kakar has been the CEO of IDFC Limited (NSE:IDFC) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. 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 IDFC
Comparing IDFC Limited's CEO Compensation With the industry
At the time of writing, our data shows that IDFC Limited has a market capitalization of ₹48b, and reported total annual CEO compensation of ₹33m for the year to March 2020. Notably, that's an increase of 13% over the year before. We note that the salary portion, which stands at ₹27.8m constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between ₹29b and ₹117b, we discovered that the median CEO total compensation of that group was ₹100m. That is to say, Sunil Kakar is paid under the industry median. Moreover, Sunil Kakar also holds ₹3.0m worth of IDFC 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 | ₹28m | ₹25m | 84% |
| Other | ₹5.2m | ₹4.2m | 16% |
| Total Compensation | ₹33m | ₹29m | 100% |
Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In IDFC's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
IDFC Limited's Growth
Over the last three years, IDFC Limited has shrunk its earnings per share by 98% per year. Its revenue is down 14% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 IDFC Limited Been A Good Investment?
Given the total shareholder loss of 47% over three years, many shareholders in IDFC Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As previously discussed, Sunil is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Sunil is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for IDFC you should be aware of, and 1 of them is potentially serious.
Important note: IDFC is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About NSEI:IDFC
IDFC
Operates as a non-banking finance investment company in India.
Flawless balance sheet with acceptable track record.
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