Why Wendt (India)'s (NSE:WENDT) CEO Pay Matters

The CEO of Wendt (India) Limited (NSE:WENDT) is Rajesh Khanna, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Wendt (India) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Wendt (India)

How Does Total Compensation For Rajesh Khanna Compare With Other Companies In The Industry?

According to our data, Wendt (India) Limited has a market capitalization of ₹6.5b, and paid its CEO total annual compensation worth ₹14m over the year to March 2020. That's a notable increase of 8.7% on last year. In particular, the salary of ₹11.0m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹5.5m. Accordingly, our analysis reveals that Wendt (India) Limited pays Rajesh Khanna north of the industry median. Moreover, Rajesh Khanna also holds ₹777k worth of Wendt (India) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 88% of total compensation represents salary and 12% is other remuneration. In Wendt (India)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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.

Wendt (India) Limited's Growth

Over the last three years, Wendt (India) Limited has shrunk its earnings per share by 14% per year. Its revenue is down 22% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Wendt (India) Limited Been A Good Investment?

We think that the total shareholder return of 39%, over three years, would leave most Wendt (India) Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As previously discussed, Rajesh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we don't think, Rajesh is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 5 warning signs for Wendt (India) that investors should be aware of in a dynamic business environment.

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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