How Should Investors React To Titagarh Wagons' (NSE:TWL) CEO Pay?

Umesh Chowdhary has been the CEO of Titagarh Wagons Limited (NSE:TWL) since 2012, and this article will examine the executive's compensation 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.

Check out our latest analysis for Titagarh Wagons

How Does Total Compensation For Umesh Chowdhary Compare With Other Companies In The Industry?

At the time of writing, our data shows that Titagarh Wagons Limited has a market capitalization of ₹6.0b, and reported total annual CEO compensation of ₹26m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹26m.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹4.5m. This suggests that Umesh Chowdhary is paid more than the median for the industry. What's more, Umesh Chowdhary holds ₹3.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 93% of total compensation represents salary, while the remainder of 7.3% is other remuneration. At the company level, Titagarh Wagons pays Umesh Chowdhary solely through a salary, preferring to go down a conventional route. 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 Titagarh Wagons Limited's Growth Numbers

Titagarh Wagons Limited has seen its earnings per share (EPS) increase by 97% a year over the past three years. Its revenue is down 28% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Titagarh Wagons Limited Been A Good Investment?

Given the total shareholder loss of 61% over three years, many shareholders in Titagarh Wagons Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Titagarh Wagons rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Umesh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Umesh is earning a very handsome sum.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Titagarh Wagons (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Titagarh Wagons, 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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