A Look At HBL Power Systems' (NSE:HBLPOWER) CEO Remuneration

Aluru Prasad has been the CEO of HBL Power Systems Limited (NSE:HBLPOWER) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for HBL Power Systems.

View our latest analysis for HBL Power Systems

How Does Total Compensation For Aluru Prasad Compare With Other Companies In The Industry?

At the time of writing, our data shows that HBL Power Systems Limited has a market capitalization of ₹10b, and reported total annual CEO compensation of ₹21m for the year to March 2020. That's just a smallish increase of 7.9% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹10m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.4m. This suggests that Aluru Prasad is paid more than the median for the industry. Moreover, Aluru Prasad also holds ₹273m worth of HBL Power Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6.2% of the pie. HBL Power Systems pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

HBL Power Systems Limited's Growth

Over the last three years, HBL Power Systems Limited has shrunk its earnings per share by 25% per year. It saw its revenue drop 23% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 HBL Power Systems Limited Been A Good Investment?

Since shareholders would have lost about 31% over three years, some HBL Power Systems Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Aluru is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for HBL Power Systems (1 shouldn't be ignored!) that you should be aware of before investing here.

Switching gears from HBL Power Systems, 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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