In 1993 Sudhir Kumar Munjal was appointed CEO of Munjal Auto Industries Limited (NSE:MUNJALAU). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Sudhir Kumar Munjal's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Munjal Auto Industries Limited has a market cap of ₹3.5b, and is paying total annual CEO compensation of ₹24m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹12m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.4m.
Thus we can conclude that Sudhir Kumar Munjal receives more in total compensation than the median of a group of companies in the same market, and of similar size to Munjal Auto Industries Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Munjal Auto Industries has changed from year to year.
Is Munjal Auto Industries Limited Growing?
On average over the last three years, Munjal Auto Industries Limited has grown earnings per share (EPS) by 16% each year (using a line of best fit). In the last year, its revenue is up 18%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
Has Munjal Auto Industries Limited Been A Good Investment?
With a three year total loss of 14%, Munjal Auto Industries Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Munjal Auto Industries 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.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying Munjal Auto Industries shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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