This article will reflect on the compensation paid to Sudhir Kumar Munjal who has served as CEO of Munjal Auto Industries Limited (NSE:MUNJALAU) since 1993. This analysis will also assess whether Munjal Auto Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Munjal Auto Industries Limited's CEO Compensation With the industry
Our data indicates that Munjal Auto Industries Limited has a market capitalization of ₹5.8b, and total annual CEO compensation was reported as ₹34m for the year to March 2020. Notably, that's an increase of 42% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹15m.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹10m. Hence, we can conclude that Sudhir Kumar Munjal is remunerated higher than the industry median.
On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. Munjal Auto Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Munjal Auto Industries Limited's Growth
Over the last three years, Munjal Auto Industries Limited has shrunk its earnings per share by 60% per year. Its revenue is up 24% over the last year.
Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Munjal Auto Industries Limited Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Munjal Auto Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Munjal Auto Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Munjal Auto Industries is in a sound position, considering both metrics are down. In contrast, revenue growth for the company has been showing a positive trend. Few would argue that it's wise for the company to pay any more, before returns improve.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Munjal Auto Industries (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Munjal Auto Industries, 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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