ESAB India Limited's (NSE:ESABINDIA) CEO Looks Like They Deserve Their Pay Packet

We have been pretty impressed with the performance at ESAB India Limited (NSE:ESABINDIA) recently and CEO Rohit Gambhir deserves a mention for their role in it. Coming up to the next AGM on 12 August 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

View our latest analysis for ESAB India

How Does Total Compensation For Rohit Gambhir Compare With Other Companies In The Industry?

According to our data, ESAB India Limited has a market capitalization of ₹30b, and paid its CEO total annual compensation worth ₹23m over the year to March 2021. Notably, that's an increase of 26% over the year before. We note that the salary portion, which stands at ₹17.3m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹15b to ₹59b, we found that the median CEO total compensation was ₹23m. So it looks like ESAB India compensates Rohit Gambhir in line with the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	₹17m	₹18m	74%
Other	₹6.2m	₹556k	26%
Total Compensation	₹23m	₹19m	100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. It's interesting to note that ESAB India allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at ESAB India Limited's Growth Numbers

ESAB India Limited's earnings per share (EPS) grew 17% per year over the last three years. It saw its revenue drop 2.3% over the last year.

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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has ESAB India Limited Been A Good Investment?

We think that the total shareholder return of 205%, over three years, would leave most ESAB India Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for ESAB India that investors should look into moving forward.

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.

If you decide to trade ESAB India, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.