What Can We Conclude About Linc Pen & Plastics' (NSE:LINCPEN) CEO Pay?

The CEO of Linc Pen & Plastics Limited (NSE:LINCPEN) is Deepak Jalan, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Linc Pen & Plastics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Linc Pen & Plastics

Comparing Linc Pen & Plastics Limited's CEO Compensation With the industry

At the time of writing, our data shows that Linc Pen & Plastics Limited has a market capitalization of ₹2.3b, and reported total annual CEO compensation of ₹12m for the year to March 2020. That's a notable increase of 52% on last year. Notably, the salary which is ₹9.00m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.0m. This suggests that Deepak Jalan is paid more than the median for the industry. Furthermore, Deepak Jalan directly owns ₹457m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Linc Pen & Plastics sets aside a smaller share of compensation for 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.

Linc Pen & Plastics Limited's Growth

Over the last three years, Linc Pen & Plastics Limited has shrunk its earnings per share by 6.3% per year. Its revenue is down 15% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Linc Pen & Plastics Limited Been A Good Investment?

Given the total shareholder loss of 37% over three years, many shareholders in Linc Pen & Plastics Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Deepak is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Linc Pen & Plastics we think you should know about.

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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