Is India Nippon Electricals Limited (NSE:INDNIPPON) Overpaying Its CEO?

Arvind Balaji has been the CEO of India Nippon Electricals Limited (NSE:INDNIPPON) since 2014. 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for India Nippon Electricals

How Does Arvind Balaji's Compensation Compare With Similar Sized Companies?

According to our data, India Nippon Electricals Limited has a market capitalization of ₹7.1b, and paid its CEO total annual compensation worth ₹30m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at ₹8.6m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined a group of similar sized companies, with market capitalizations of below ₹15b. The median CEO total compensation in that group is ₹3.6m.

As you can see, Arvind Balaji is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean India Nippon Electricals Limited is paying too much. 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 India Nippon Electricals has changed over time.

Is India Nippon Electricals Limited Growing?

Over the last three years India Nippon Electricals Limited has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has India Nippon Electricals Limited Been A Good Investment?

India Nippon Electricals Limited has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We examined the amount India Nippon Electricals Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at India Nippon Electricals.

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.

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.

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