How Much Is India Nippon Electricals Limited (NSE:INDNIPPON) Paying Its CEO?

This article will reflect on the compensation paid to Arvind Balaji who has served as CEO of India Nippon Electricals Limited (NSE:INDNIPPON) since 2014. This analysis will also assess whether India Nippon Electricals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for India Nippon Electricals

How Does Total Compensation For Arvind Balaji Compare With Other Companies In The Industry?

According to our data, India Nippon Electricals Limited has a market capitalization of ₹9.1b, and paid its CEO total annual compensation worth ₹28m over the year to March 2020. Notably, that's a decrease of 8.5% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹10.0m.

For comparison, other companies in the industry with market capitalizations below ₹14b, reported a median total CEO compensation of ₹10m. This suggests that Arvind Balaji is paid more than the median for the industry.

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. In India Nippon Electricals' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at India Nippon Electricals Limited's Growth Numbers

Over the last three years, India Nippon Electricals Limited has shrunk its earnings per share by 8.8% per year. It saw its revenue drop 12% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 India Nippon Electricals Limited Been A Good Investment?

With a three year total loss of 17% for the shareholders, India Nippon Electricals Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, India Nippon Electricals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for India Nippon Electricals that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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