Is Kajaria Ceramics Limited’s (NSE:KAJARIACER) CEO Being Overpaid?

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Ashok Kajaria has been the CEO of Kajaria Ceramics Limited (NSE:KAJARIACER) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Kajaria Ceramics

How Does Ashok Kajaria’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Kajaria Ceramics Limited has a market cap of ₹97b, and is paying total annual CEO compensation of ₹41m. (This is based on the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹23m. We examined companies with market caps from ₹70b to ₹223b, and discovered that the median CEO total compensation of that group was ₹39m.

So Ashok Kajaria receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at Kajaria Ceramics has changed over time.

NSEI:KAJARIACER CEO Compensation, June 15th 2019
NSEI:KAJARIACER CEO Compensation, June 15th 2019

Is Kajaria Ceramics Limited Growing?

On average over the last three years, Kajaria Ceramics Limited has shrunk earnings per share by 3.3% each year (measured with a line of best fit). In the last year, its revenue is up 9.1%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has Kajaria Ceramics Limited Been A Good Investment?

With a total shareholder return of 3.8% over three years, Kajaria Ceramics Limited has done okay by shareholders. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Remuneration for Ashok Kajaria is close enough to the median pay for a CEO of a similar sized company .

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. So you may want to check if insiders are buying Kajaria Ceramics shares with their own money (free access).

If you want to buy a stock that is better than Kajaria Ceramics, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.