What We Learned About Atul Auto's (NSE:ATULAUTO) CEO Compensation

By
Simply Wall St
Published
February 25, 2021
NSEI:ATULAUTO
Source: Shutterstock

Jayantibhai Chandra is the CEO of Atul Auto Limited (NSE:ATULAUTO), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Atul Auto.

Check out our latest analysis for Atul Auto

Comparing Atul Auto Limited's CEO Compensation With the industry

At the time of writing, our data shows that Atul Auto Limited has a market capitalization of ₹4.0b, and reported total annual CEO compensation of ₹16m for the year to March 2020. We note that's an increase of 14% above last year. Notably, the salary which is ₹15.6m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹14b, reported a median total CEO compensation of ₹13m. This suggests that Atul Auto remunerates its CEO largely in line with the industry average. Furthermore, Jayantibhai Chandra directly owns ₹697m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary ₹16m ₹14m 99%
Other ₹150k - 1%
Total Compensation₹16m ₹14m100%

On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. Atul Auto is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
NSEI:ATULAUTO CEO Compensation February 26th 2021

A Look at Atul Auto Limited's Growth Numbers

Over the last three years, Atul Auto Limited has shrunk its earnings per share by 73% per year. In the last year, its revenue is down 54%.

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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Atul Auto Limited Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Atul Auto Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Jayantibhai receives almost all of their compensation through a salary. As we touched on above, Atul Auto Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Atul Auto (1 doesn't sit too well with us!) that you should be aware of before investing here.

Switching gears from Atul Auto, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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