Is Mindteck (India) Limited’s (NSE:MINDTECK) CEO Being Overpaid?

In 2017 Sanjeev Kathpalia was appointed CEO of Mindteck (India) Limited (NSE:MINDTECK). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Mindteck (India)

How Does Sanjeev Kathpalia’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Mindteck (India) Limited has a market cap of ₹668m, and reported total annual CEO compensation of ₹18m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹13m. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹3.5m.

It would therefore appear that Mindteck (India) Limited pays Sanjeev Kathpalia more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Mindteck (India) has changed from year to year.

NSEI:MINDTECK CEO Compensation, February 10th 2020
NSEI:MINDTECK CEO Compensation, February 10th 2020

Is Mindteck (India) Limited Growing?

Over the last three years Mindteck (India) Limited has shrunk its earnings per share by an average of 82% per year (measured with a line of best fit). In the last year, its revenue is down 1.8%.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Mindteck (India) Limited Been A Good Investment?

Given the total loss of 70% over three years, many shareholders in Mindteck (India) Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Mindteck (India) Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years. Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Mindteck (India) shares (free trial).

Important note: Mindteck (India) may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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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