Is BPL Limited's (NSE:BPL) CEO Pay Justified?

By
Simply Wall St
Published
July 04, 2019
NSEI:BPL

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Ajit Nambiar became the CEO of BPL Limited (NSE:BPL) in 1993. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for BPL

How Does Ajit Nambiar's Compensation Compare With Similar Sized Companies?

According to our data, BPL Limited has a market capitalization of ₹1.1b, and pays its CEO total annual compensation worth ₹8.8m. (This number is for the twelve months until March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹7.8m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.3m.

As you can see, Ajit Nambiar is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean BPL Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at BPL has changed from year to year.

NSEI:BPL CEO Compensation, July 4th 2019
NSEI:BPL CEO Compensation, July 4th 2019

Is BPL Limited Growing?

On average over the last three years, BPL Limited has shrunk earnings per share by 54% each year (measured with a line of best fit). In the last year, its revenue is up 13%.

Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has BPL Limited Been A Good Investment?

Since shareholders would have lost about 35% over three years, some BPL Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at BPL 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.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling BPL shares (free trial).

If you want to buy a stock that is better than BPL, 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.

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