Is Elecon Engineering Company Limited's (NSE:ELECON) CEO Paid Enough Relative To Peers?

The CEO of Elecon Engineering Company Limited (NSE:ELECON) is Prayasvin Patel. First, this article will compare CEO compensation with compensation at similar sized companies. 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.

View our latest analysis for Elecon Engineering

How Does Prayasvin Patel's Compensation Compare With Similar Sized Companies?

Our data indicates that Elecon Engineering Company Limited is worth ₹4.1b, and total annual CEO compensation was reported as ₹21m for the year to March 2019. That's actually a decrease on the year before. Notably, the salary of ₹20m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹2.4m.

As you can see, Prayasvin Patel is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Elecon Engineering Company Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

The graphic below shows how CEO compensation at Elecon Engineering has changed from year to year.

Is Elecon Engineering Company Limited Growing?

Elecon Engineering Company Limited has increased its earnings per share (EPS) by an average of 67% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 4.7%.

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.

Has Elecon Engineering Company Limited Been A Good Investment?

With a three year total loss of 36%, Elecon Engineering Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Elecon Engineering Company Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Elecon Engineering shares (free trial).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.