Why Kothari Products' (NSE:KOTHARIPRO) CEO Pay Matters

Deepak Kothari became the CEO of Kothari Products Limited (NSE:KOTHARIPRO) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Kothari Products pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Kothari Products

How Does Total Compensation For Deepak Kothari Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kothari Products Limited has a market capitalization of ₹2.1b, and reported total annual CEO compensation of ₹4.8m for the year to March 2020. That's a notable decrease of 12% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹2.4m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹1.5m. Accordingly, our analysis reveals that Kothari Products Limited pays Deepak Kothari north of the industry median. Furthermore, Deepak Kothari directly owns ₹1.2b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Kothari Products pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Kothari Products Limited's Growth Numbers

Kothari Products Limited has reduced its earnings per share by 86% a year over the last three years. It saw its revenue drop 34% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kothari Products Limited Been A Good Investment?

Since shareholders would have lost about 58% over three years, some Kothari Products 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 we touched on above, Kothari Products 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. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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. In our study, we found 3 warning signs for Kothari Products you should be aware of, and 2 of them can't be ignored.

Switching gears from Kothari Products, 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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