How Is Ashoka Buildcon's (NSE:ASHOKA) CEO Paid Relative To Peers?

Satish Parakh has been the CEO of Ashoka Buildcon Limited (NSE:ASHOKA) since 2006, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Ashoka Buildcon

How Does Total Compensation For Satish Parakh Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ashoka Buildcon Limited has a market capitalization of ₹29b, and reported total annual CEO compensation of ₹51m for the year to March 2020. We note that's an increase of 10% above last year. Notably, the salary which is ₹37.1m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between ₹15b and ₹58b had a median total CEO compensation of ₹44m. From this we gather that Satish Parakh is paid around the median for CEOs in the industry. What's more, Satish Parakh holds ₹5.4b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. It's interesting to note that Ashoka Buildcon allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Ashoka Buildcon Limited's Growth

Over the past three years, Ashoka Buildcon Limited has seen its earnings per share (EPS) grow by 127% per year. In the last year, its revenue is down 4.2%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ashoka Buildcon Limited Been A Good Investment?

Since shareholders would have lost about 36% over three years, some Ashoka Buildcon Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Ashoka Buildcon pays its CEO in line with similar-sized companies belonging to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Ashoka Buildcon (2 are significant!) that you should be aware of before investing here.

Switching gears from Ashoka Buildcon, 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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