Is Edelweiss Financial Services Limited's (NSE:EDELWEISS) CEO Being Overpaid?

The CEO of Edelweiss Financial Services Limited (NSE:EDELWEISS) is Rashesh Shah. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Edelweiss Financial Services

How Does Rashesh Shah's Compensation Compare With Similar Sized Companies?

According to our data, Edelweiss Financial Services Limited has a market capitalization of ₹35b, and paid its CEO total annual compensation worth ₹73m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at ₹13m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from ₹15b to ₹61b, we found the median CEO total compensation was ₹27m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, a majority of companies prefer salaries as their mode of payment for CEOs, with non-salary benefits largely snubbed. It's interesting to note that Edelweiss Financial Services allocates a smaller portion of compensation to salary in comparison to the broader industry.

As you can see, Rashesh Shah is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Edelweiss Financial Services Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at Edelweiss Financial Services has changed over time.

Is Edelweiss Financial Services Limited Growing?

Edelweiss Financial Services Limited has seen earnings per share (EPS) move positively by an average of 2.0% a year, over the last three years (using a line of best fit). It saw its revenue drop 23% over the last year.

I would prefer it if there was revenue growth, but I'm happy with the EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Shareholders might be interested in this free visualization of analyst forecasts.

Has Edelweiss Financial Services Limited Been A Good Investment?

Since shareholders would have lost about 78% over three years, some Edelweiss Financial Services Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Edelweiss Financial Services Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Shifting gears from CEO pay for a second, we've picked out 5 warning signs for Edelweiss Financial Services that investors should be aware of in a dynamic business environment.

If you want to buy a stock that is better than Edelweiss Financial Services, this free list of high return, low debt companies is a great place to look.

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