Should You Worry About Linc Pen & Plastics Limited’s (NSE:LINCPENQ) CEO Pay Cheque?

The CEO of Linc Pen & Plastics Limited (NSE:LINCPENQ) is Deepak Jalan. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Linc Pen & Plastics

How Does Deepak Jalan’s Compensation Compare With Similar Sized Companies?

Our data indicates that Linc Pen & Plastics Limited is worth ₹3.0b, and total annual CEO compensation is ₹8.6m. (This figure is for the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at ₹7.5m. We took a group of companies with market capitalizations below ₹14b, and calculated the median CEO total compensation to be ₹1.2m.

Thus we can conclude that Deepak Jalan receives more in total compensation than the median of a group of companies in the same market, and of similar size to Linc Pen & Plastics Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Linc Pen & Plastics has changed from year to year.

NSEI:LINCPENQ CEO Compensation, March 16th 2019
NSEI:LINCPENQ CEO Compensation, March 16th 2019

Is Linc Pen & Plastics Limited Growing?

Over the last three years Linc Pen & Plastics Limited has shrunk its earnings per share by an average of 31% per year (measured with a line of best fit). It achieved revenue growth of 7.0% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Linc Pen & Plastics Limited Been A Good Investment?

Linc Pen & Plastics Limited has served shareholders reasonably well, with a total return of 15% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared total CEO remuneration at Linc Pen & Plastics Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

While shareholder returns are acceptable, they don’t delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! So you may want to check if insiders are buying Linc Pen & Plastics shares with their own money (free access).

If you want to buy a stock that is better than Linc Pen & Plastics, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.