How Does Bharat Bijlee's (NSE:BBL) CEO Pay Compare With Company Performance?

By
Simply Wall St
Published
January 20, 2021
NSEI:BBL
Source: Shutterstock

Nakul Mehta has been the CEO of Bharat Bijlee Limited (NSE:BBL) since 1990, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Bharat Bijlee.

See our latest analysis for Bharat Bijlee

How Does Total Compensation For Nakul Mehta Compare With Other Companies In The Industry?

According to our data, Bharat Bijlee Limited has a market capitalization of ₹5.1b, and paid its CEO total annual compensation worth ₹45m over the year to March 2020. We note that's an increase of 98% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹7.9m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹6.4m. This suggests that Nakul Mehta is paid more than the median for the industry. Moreover, Nakul Mehta also holds ₹268m worth of Bharat Bijlee stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary ₹7.9m ₹6.0m 17%
Other ₹37m ₹17m 83%
Total Compensation₹45m ₹23m100%

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6.2% is other remuneration. Bharat Bijlee pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NSEI:BBL CEO Compensation January 21st 2021

Bharat Bijlee Limited's Growth

Bharat Bijlee Limited has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is down 21%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Bharat Bijlee Limited Been A Good Investment?

Given the total shareholder loss of 34% over three years, many shareholders in Bharat Bijlee Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Nakul is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Considering overall performance, we can't say Nakul is underpaid, in fact compensation is definitely on the higher side.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Bharat Bijlee that investors should look into moving forward.

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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