Our View On Godrej Industries' (NSE:GODREJIND) CEO Pay

Nadir Godrej is the CEO of Godrej Industries Limited (NSE:GODREJIND), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Godrej Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Godrej Industries

Comparing Godrej Industries Limited's CEO Compensation With the industry

Our data indicates that Godrej Industries Limited has a market capitalization of ₹129b, and total annual CEO compensation was reported as ₹74m for the year to March 2020. We note that's an increase of 24% above last year. Notably, the salary which is ₹68.3m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from ₹75b to ₹239b, we found that the median CEO total compensation was ₹74m. So it looks like Godrej Industries compensates Nadir Godrej in line with the median for the industry. Furthermore, Nadir Godrej directly owns ₹5.2b worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 54% of total compensation out of all the companies we analyzed, while other remuneration made up 46% of the pie. Godrej Industries is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Godrej Industries Limited's Growth

Godrej Industries Limited's earnings per share (EPS) grew 14% per year over the last three years. In the last year, its revenue is down 3.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Godrej Industries Limited Been A Good Investment?

With a three year total loss of 34% for the shareholders, Godrej Industries Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Godrej Industries Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Nadir is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

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 did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in Godrej Industries we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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