How Much is Menon Bearings' (NSE:MENONBE) CEO Getting Paid?

This article will reflect on the compensation paid to Nitin Menon who has served as CEO of Menon Bearings Limited (NSE:MENONBE) since 2000. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Menon Bearings

How Does Total Compensation For Nitin Menon Compare With Other Companies In The Industry?

Our data indicates that Menon Bearings Limited has a market capitalization of ₹3.3b, and total annual CEO compensation was reported as ₹10m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹10m.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹10m. So it looks like Menon Bearings compensates Nitin Menon in line with the median for the industry. Moreover, Nitin Menon also holds ₹1.2b worth of Menon Bearings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Speaking on a company level, Menon Bearings prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Menon Bearings Limited's Growth

Over the last three years, Menon Bearings Limited has shrunk its earnings per share by 10% per year. In the last year, its revenue is down 9.5%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Menon Bearings Limited Been A Good Investment?

With a three year total loss of 35% for the shareholders, Menon Bearings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Menon Bearings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Menon Bearings 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. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Menon Bearings (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Menon Bearings, 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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