A Quick Analysis On Madhucon Projects' (NSE:MADHUCON) CEO Compensation

Nama Seethaiah is the CEO of Madhucon Projects Limited (NSE:MADHUCON), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Madhucon Projects

How Does Total Compensation For Nama Seethaiah Compare With Other Companies In The Industry?

Our data indicates that Madhucon Projects Limited has a market capitalization of ₹439m, and total annual CEO compensation was reported as ₹6.0m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of ₹6.0m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹14b, reported a median total CEO compensation of ₹4.8m. So it looks like Madhucon Projects compensates Nama Seethaiah in line with the median for the industry. Furthermore, Nama Seethaiah directly owns ₹38m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Speaking on a company level, Madhucon Projects prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Madhucon Projects Limited's Growth Numbers

Over the last three years, Madhucon Projects Limited has shrunk its earnings per share by 23% per year. Its revenue is up 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Madhucon Projects Limited Been A Good Investment?

Since shareholders would have lost about 77% over three years, some Madhucon Projects Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Madhucon Projects pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Nama is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Madhucon Projects (3 don't sit too well with us!) that you should be aware of before investing here.

Important note: Madhucon Projects 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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