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Why Orient Paper & Industries' (NSE:ORIENTPPR) CEO Pay Matters
This article will reflect on the compensation paid to Manohar Pachisia who has served as CEO of Orient Paper & Industries Limited (NSE:ORIENTPPR) since 1991. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Orient Paper & Industries
How Does Total Compensation For Manohar Pachisia Compare With Other Companies In The Industry?
Our data indicates that Orient Paper & Industries Limited has a market capitalization of ₹3.7b, and total annual CEO compensation was reported as ₹41m for the year to March 2020. That's a notable decrease of 20% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹15m.
In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹7.8m. Accordingly, our analysis reveals that Orient Paper & Industries Limited pays Manohar Pachisia north of the industry median. Furthermore, Manohar Pachisia directly owns ₹666k worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹15m | ₹15m | 37% |
| Other | ₹26m | ₹36m | 63% |
| Total Compensation | ₹41m | ₹51m | 100% |
On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Orient Paper & Industries pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Orient Paper & Industries Limited's Growth Numbers
Over the last three years, Orient Paper & Industries Limited has shrunk its earnings per share by 26% per year. Its revenue is down 26% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Orient Paper & Industries Limited Been A Good Investment?
Since shareholders would have lost about 82% over three years, some Orient Paper & Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As previously discussed, Manohar is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Orient Paper & Industries that investors should think about before committing capital to this stock.
Important note: Orient Paper & Industries 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About NSEI:ORIENTPPR
Orient Paper & Industries
Manufactures and sells paper and paper-related products in India and internationally.
Slightly overvalued with very low risk.
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