Deepak Hota became the CEO of BEML Limited (NSE:BEML) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Deepak Hota’s Compensation Compare With Similar Sized Companies?
Our data indicates that BEML Limited is worth ₹37b, and total annual CEO compensation is ₹4.5m. (This is based on the year to 2018). While we always look at total compensation first, we note that the salary component is less, at ₹2.6m. We examined companies with market caps from ₹14b to ₹57b, and discovered that the median CEO compensation of that group was ₹22m.
Most shareholders would consider it a positive that Deepak Hota takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. Take a look at BEML’s profit growth by viewing this free data-rich visualization of earnings, revenue and cash flow.
You can see, below, how CEO compensation at BEML has changed over time.
Is BEML Limited Growing?
Over the last three years BEML Limited has grown its earnings per share (EPS) by an average of 55% per year (using a line of best fit). It achieved revenue growth of 30% over the last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see.
Has BEML Limited Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in BEML Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
It appears that BEML Limited remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we would not say that Deepak Hota is generously paid, it would be good to see an improvement in business performance before too an increase in pay.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at BEML.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.