The CEO of GRP Limited (NSE:GRPLTD) is Rajendra Gandhi, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether GRP pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for GRP
Comparing GRP Limited's CEO Compensation With the industry
At the time of writing, our data shows that GRP Limited has a market capitalization of ₹1.1b, and reported total annual CEO compensation of ₹11m for the year to March 2020. Notably, that's an increase of 11% over the year before. In particular, the salary of ₹10.1m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹10m. From this we gather that Rajendra Gandhi is paid around the median for CEOs in the industry. What's more, Rajendra Gandhi holds ₹60m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹10m | ₹9.0m | 90% |
| Other | ₹1.1m | ₹1.0m | 10% |
| Total Compensation | ₹11m | ₹10m | 100% |
On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. It's interesting to note that GRP pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at GRP Limited's Growth Numbers
Over the last three years, GRP Limited has shrunk its earnings per share by 65% per year. It saw its revenue drop 25% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 GRP Limited Been A Good Investment?
With a three year total loss of 37% for the shareholders, GRP Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we touched on above, GRP 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. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for GRP (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: GRP 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.
When trading GRP or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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 (at) simplywallst.com.
About NSEI:GRPLTD
GRP
Manufactures and sells reclaimed rubber products for tyre and non-tyre rubber goods in India and internationally.
Solid track record with adequate balance sheet.
