Is Electrovaya Inc. (TSE:EFL) Overpaying Its CEO?

Sankar Gupta is the CEO of Electrovaya Inc. (TSE:EFL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Electrovaya

How Does Sankar Gupta’s Compensation Compare With Similar Sized Companies?

Our data indicates that Electrovaya Inc. is worth CA$18m, and total annual CEO compensation is US$206k. (This number is for the twelve months until September 2018). That’s actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$195k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO compensation was US$108k.

It would therefore appear that Electrovaya Inc. pays Sankar Gupta more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Electrovaya has changed over time.

TSX:EFL CEO Compensation, March 12th 2019
TSX:EFL CEO Compensation, March 12th 2019

Is Electrovaya Inc. Growing?

Over the last three years Electrovaya Inc. has shrunk its earnings per share by an average of 47% per year (measured with a line of best fit). It achieved revenue growth of 199% over the last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Electrovaya Inc. Been A Good Investment?

Since shareholders would have lost about 83% over three years, some Electrovaya Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Electrovaya Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. So you may want to check if insiders are buying Electrovaya shares with their own money (free access).

Important note: Electrovaya may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.