A Quick Analysis On ESAB India's (NSE:ESABINDIA) CEO Salary

Rohit Gambhir became the CEO of ESAB India Limited (NSE:ESABINDIA) in 2014, 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 ESAB India pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for ESAB India

Comparing ESAB India Limited's CEO Compensation With the industry

At the time of writing, our data shows that ESAB India Limited has a market capitalization of ₹21b, and reported total annual CEO compensation of ₹19m for the year to March 2020. We note that's a decrease of 18% compared to last year. Notably, the salary which is ₹18.0m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from ₹7.4b to ₹30b, we found that the median CEO total compensation was ₹25m. So it looks like ESAB India compensates Rohit Gambhir in line with the median for the industry.

On an industry level, roughly 91% of total compensation represents salary and 9.1% is other remuneration. ESAB India is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.

A Look at ESAB India Limited's Growth Numbers

ESAB India Limited's earnings per share (EPS) grew 36% per year over the last three years. Its revenue is down 7.6% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few 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 ESAB India Limited Been A Good Investment?

Most shareholders would probably be pleased with ESAB India Limited for providing a total return of 100% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

ESAB India pays its CEO a majority of compensation through a salary. As previously discussed, Rohit is compensated close to the median for companies of its size, and which belong to the same industry. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. So one could argue that CEO compensation is quite modest, if you consider company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for ESAB India (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from ESAB India, 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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