This article will reflect on the compensation paid to Manoj Sodhani who has served as CEO of Gillanders Arbuthnot and Company Limited (NSE:GILLANDERS) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Gillanders Arbuthnot
Comparing Gillanders Arbuthnot and Company Limited's CEO Compensation With the industry
According to our data, Gillanders Arbuthnot and Company Limited has a market capitalization of ₹790m, and paid its CEO total annual compensation worth ₹8.9m over the year to March 2020. That's a notable increase of 20% on last year. In particular, the salary of ₹7.82m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹8.9m. So it looks like Gillanders Arbuthnot compensates Manoj Sodhani in line with the median for the industry.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹7.8m | ₹7.1m | 88% |
| Other | ₹1.1m | ₹321k | 12% |
| Total Compensation | ₹8.9m | ₹7.5m | 100% |
On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. Gillanders Arbuthnot pays out 88% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Gillanders Arbuthnot and Company Limited's Growth
Over the last three years, Gillanders Arbuthnot and Company Limited has shrunk its earnings per share by 70% per year. In the last year, its revenue is down 35%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Gillanders Arbuthnot and Company Limited Been A Good Investment?
With a three year total loss of 46% for the shareholders, Gillanders Arbuthnot and Company Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we noted earlier, Gillanders Arbuthnot pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Gillanders Arbuthnot that you should be aware of before investing.
Important note: Gillanders Arbuthnot is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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About NSEI:GILLANDERS
Gillanders Arbuthnot
Engages in the textile, engineering, tea, and property businesses in India and internationally.
Adequate balance sheet and fair value.
