We Take A Look At Why Axis Bank Limited's (NSE:AXISBANK) CEO Has Earned Their Pay Packet

It would be hard to discount the role that CEO Amitabh Chaudhry has played in delivering the impressive results at Axis Bank Limited (NSE:AXISBANK) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 30 July 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Axis Bank

How Does Total Compensation For Amitabh Chaudhry Compare With Other Companies In The Industry?

Our data indicates that Axis Bank Limited has a market capitalization of ₹2.3t, and total annual CEO compensation was reported as ₹65m for the year to March 2021. That's a notable increase of 8.1% on last year. In particular, the salary of ₹38.8m, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations above ₹596b, reported a median total CEO compensation of ₹62m. So it looks like Axis Bank compensates Amitabh Chaudhry in line with the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	₹39m	₹39m	60%
Other	₹26m	₹21m	40%
Total Compensation	₹65m	₹60m	100%

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. Axis Bank 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.

Axis Bank Limited's Growth

Axis Bank Limited's earnings per share (EPS) grew 135% per year over the last three years. In the last year, its revenue is up 33%.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Axis Bank Limited Been A Good Investment?

We think that the total shareholder return of 37%, over three years, would leave most Axis Bank Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Axis Bank (2 can't be ignored!) that you should be aware of before investing here.

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.

When trading Axis Bank or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.