How Should Investors Feel About Balaji Telefilms' (NSE:BALAJITELE) CEO Remuneration?

Shobha Kapoor has been the CEO of Balaji Telefilms Limited (NSE:BALAJITELE) since 2004, 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 Balaji Telefilms

How Does Total Compensation For Shobha Kapoor Compare With Other Companies In The Industry?

At the time of writing, our data shows that Balaji Telefilms Limited has a market capitalization of ₹6.5b, and reported total annual CEO compensation of ₹24m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is ₹22.3m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹3.9m. Accordingly, our analysis reveals that Balaji Telefilms Limited pays Shobha Kapoor north of the industry median. What's more, Shobha Kapoor holds ₹698m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 99% of total compensation represents salary and 1.1% is other remuneration. Balaji Telefilms is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Balaji Telefilms Limited's Growth Numbers

Over the last three years, Balaji Telefilms Limited has shrunk its earnings per share by 14% per year. In the last year, its revenue is up 31%.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Balaji Telefilms Limited Been A Good Investment?

Since shareholders would have lost about 59% over three years, some Balaji Telefilms Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Balaji Telefilms 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. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. On a more positive note, the company has produced a more positive revenue growth more recently. Few would argue that it's wise for the company to pay any more, before returns improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Balaji Telefilms (2 are a bit unpleasant!) that you should be aware of before investing here.

Important note: Balaji Telefilms 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.
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