How Should Investors React To Talbros Automotive Components' (NSE:TALBROAUTO) CEO Pay?

This article will reflect on the compensation paid to Umesh Talwar who has served as CEO of Talbros Automotive Components Limited (NSE:TALBROAUTO) since 2000. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Talbros Automotive Components.

See our latest analysis for Talbros Automotive Components

Comparing Talbros Automotive Components Limited's CEO Compensation With the industry

According to our data, Talbros Automotive Components Limited has a market capitalization of ₹2.2b, and paid its CEO total annual compensation worth ₹17m over the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of ₹8.84m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹10m. Hence, we can conclude that Umesh Talwar is remunerated higher than the industry median. Furthermore, Umesh Talwar directly owns ₹59m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Talbros Automotive Components sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Talbros Automotive Components Limited's Growth

Over the last three years, Talbros Automotive Components Limited has shrunk its earnings per share by 34% per year. Its revenue is down 20% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Talbros Automotive Components Limited Been A Good Investment?

Given the total shareholder loss of 36% over three years, many shareholders in Talbros Automotive Components Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Talbros Automotive Components Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Talbros Automotive Components (1 is concerning!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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