How Should Investors React To Jaiprakash Associates' (NSE:JPASSOCIAT) CEO Pay?

The CEO of Jaiprakash Associates Limited (NSE:JPASSOCIAT) is Manoj Gaur, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Jaiprakash Associates

Comparing Jaiprakash Associates Limited's CEO Compensation With the industry

According to our data, Jaiprakash Associates Limited has a market capitalization of ₹17b, and paid its CEO total annual compensation worth ₹53m over the year to March 2020. Notably, that's a decrease of 33% over the year before. Notably, the salary which is ₹27.0m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.3b to ₹29b, the reported median CEO total compensation was ₹19m. Accordingly, our analysis reveals that Jaiprakash Associates Limited pays Manoj Gaur north of the industry median. Furthermore, Manoj Gaur directly owns ₹5.9m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. In Jaiprakash Associates' case, non-salary compensation represents a greater slice of total remuneration, 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.

Jaiprakash Associates Limited's Growth

Jaiprakash Associates Limited has seen its earnings per share (EPS) increase by 89% a year over the past three years. In the last year, its revenue is down 39%.

This demonstrates that the company has been improving recently and is good news for the shareholders. 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 Jaiprakash Associates Limited Been A Good Investment?

Given the total shareholder loss of 60% over three years, many shareholders in Jaiprakash Associates Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Jaiprakash Associates Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Manoj is underpaid, in fact compensation is definitely on the higher side.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for Jaiprakash Associates (1 can't be ignored!) that you should be aware of before investing here.

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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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