Sorab Mody is the CEO of Mazda Limited (NSE:MAZDA), 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.
Comparing Mazda Limited's CEO Compensation With the industry
At the time of writing, our data shows that Mazda Limited has a market capitalization of ₹2.2b, and reported total annual CEO compensation of ₹9.5m for the year to March 2020. We note that's an increase of 17% above last year. We note that the salary portion, which stands at ₹5.98m constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹5.1m. Accordingly, our analysis reveals that Mazda Limited pays Sorab Mody north of the industry median. What's more, Sorab Mody holds ₹739m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 92% of total compensation represents salary and 8.2% is other remuneration. In Mazda's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Mazda Limited's Growth Numbers
Over the past three years, Mazda Limited has seen its earnings per share (EPS) grow by 31% per year. It saw its revenue drop 7.1% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Mazda Limited Been A Good Investment?
Boasting a total shareholder return of 60% over three years, Mazda Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, Mazda 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. But EPS growth and shareholder returns have been top-notch for the past three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. Given the strong history of shareholder returns, the shareholders are probably very happy with Sorab's performance.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Mazda that investors should be aware of in a dynamic business environment.
Switching gears from Mazda, 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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