What Can We Make Of TCI Developers' (NSE:TCIDEVELOP) CEO Compensation?

Naresh Baranwal is the CEO of TCI Developers Limited (NSE:TCIDEVELOP), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for TCI Developers

Comparing TCI Developers Limited's CEO Compensation With the industry

At the time of writing, our data shows that TCI Developers Limited has a market capitalization of ₹951m, and reported total annual CEO compensation of ₹3.8m for the year to March 2020. That's a modest increase of 6.1% on the prior year. Notably, the salary of ₹3.8m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹2.4m. This suggests that Naresh Baranwal is paid more than the median for the industry.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. On a company level, TCI Developers prefers to reward its CEO through a salary, opting not to pay Naresh Baranwal through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at TCI Developers Limited's Growth Numbers

TCI Developers Limited has reduced its earnings per share by 19% a year over the last three years. It achieved revenue growth of 10% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around earnings. 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 TCI Developers Limited Been A Good Investment?

Since shareholders would have lost about 26% over three years, some TCI Developers Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

TCI Developers pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Naresh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining earnings growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 4 warning signs for TCI Developers that investors should be aware of in a dynamic business environment.

Important note: TCI Developers is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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