How Should Investors Feel About Linc Pen & Plastics' (NSE:LINCPEN) CEO Remuneration?

The CEO of Linc Pen & Plastics Limited (NSE:LINCPEN) is Deepak Jalan, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Linc Pen & Plastics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Linc Pen & Plastics

Comparing Linc Pen & Plastics Limited's CEO Compensation With the industry

According to our data, Linc Pen & Plastics Limited has a market capitalization of ₹2.6b, and paid its CEO total annual compensation worth ₹12m over the year to March 2020. Notably, that's an increase of 52% over the year before. We note that the salary portion, which stands at ₹9.00m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹2.3m. Accordingly, our analysis reveals that Linc Pen & Plastics Limited pays Deepak Jalan north of the industry median. Moreover, Deepak Jalan also holds ₹477m worth of Linc Pen & Plastics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

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. Linc Pen & Plastics pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Linc Pen & Plastics Limited's Growth

Over the last three years, Linc Pen & Plastics Limited has shrunk its earnings per share by 26% per year. It saw its revenue drop 27% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Linc Pen & Plastics Limited Been A Good Investment?

Given the total shareholder loss of 60% over three years, many shareholders in Linc Pen & Plastics Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Linc Pen & Plastics 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. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Linc Pen & Plastics (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Linc Pen & Plastics, 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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