Vishwavir Ahuja became the CEO of RBL Bank Limited (NSE:RBLBANK) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether RBL Bank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing RBL Bank Limited's CEO Compensation With the industry
According to our data, RBL Bank Limited has a market capitalization of ₹142b, and paid its CEO total annual compensation worth ₹30m over the year to March 2020. Notably, that's an increase of 23% over the year before. We note that the salary portion, which stands at ₹26.2m constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from ₹73b to ₹234b, the reported median CEO total compensation was ₹3.2m. Accordingly, our analysis reveals that RBL Bank Limited pays Vishwavir Ahuja north of the industry median. Furthermore, Vishwavir Ahuja directly owns ₹2.0b worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 71% of total compensation represents salary and 29% is other remuneration. RBL Bank pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at RBL Bank Limited's Growth Numbers
Over the last three years, RBL Bank Limited has shrunk its earnings per share by 11% per year. It achieved revenue growth of 1.2% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 RBL Bank Limited Been A Good Investment?
Since shareholders would have lost about 48% over three years, some RBL Bank Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, RBL Bank pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 4 warning signs for RBL Bank that investors should look into moving forward.
Switching gears from RBL Bank, 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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