Our Take On Menon Bearings' (NSE:MENONBE) CEO Salary

Ramesh Dixit became the CEO of Menon Bearings Limited (NSE:MENONBE) in 1992, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Menon Bearings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Menon Bearings

How Does Total Compensation For Ramesh Dixit Compare With Other Companies In The Industry?

At the time of writing, our data shows that Menon Bearings Limited has a market capitalization of ₹2.3b, and reported total annual CEO compensation of ₹8.0m for the year to March 2020. That's just a smallish increase of 5.6% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹8.0m.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹11m. So it looks like Menon Bearings compensates Ramesh Dixit in line with the median for the industry.

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. On a company level, Menon Bearings prefers to reward its CEO through a salary, opting not to pay Ramesh Dixit through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Menon Bearings Limited's Growth

Menon Bearings Limited has reduced its earnings per share by 15% a year over the last three years. In the last year, its revenue is down 31%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Menon Bearings Limited Been A Good Investment?

Since shareholders would have lost about 42% over three years, some Menon Bearings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Menon Bearings rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Menon Bearings pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 4 warning signs for Menon Bearings that investors should think about before committing capital to this stock.

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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