Rajeev Jhawar has been the CEO of Usha Martin Limited (NSE:USHAMART) since 2008, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Usha Martin.
See our latest analysis for Usha Martin
Comparing Usha Martin Limited’s CEO Compensation With the industry
According to our data, Usha Martin Limited has a market capitalization of ₹8.1b, and paid its CEO total annual compensation worth ₹15m over the year to March 2020. That’s a slightly lower by 5.4% over the previous year. In particular, the salary of ₹10.6m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.1m. Accordingly, our analysis reveals that Usha Martin Limited pays Rajeev Jhawar north of the industry median. Moreover, Rajeev Jhawar also holds ₹183m worth of Usha Martin 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 | ₹11m | ₹11m | 71% |
| Other | ₹4.3m | ₹4.4m | 29% |
| Total Compensation | ₹15m | ₹16m | 100% |
Talking in terms of the industry, salary represented approximately 100% of total compensation out of all the companies we analyzed, while other remuneration made up 0.4% of the pie. In Usha Martin’s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.
A Look at Usha Martin Limited’s Growth Numbers
Usha Martin Limited has seen its earnings per share (EPS) increase by 79% a year over the past three years. Its revenue is down 18% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. While we don’t have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Usha Martin Limited Been A Good Investment?
Usha Martin Limited has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
To Conclude…
As we noted earlier, Usha Martin pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize CEO compensation, though we’d recommend further research on management.
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 4 warning signs for Usha Martin (1 is a bit unpleasant!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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