Does Butterfly Gandhimathi Appliances' (NSE:BUTTERFLY) CEO Salary Compare Well With Industry Peers?

This article will reflect on the compensation paid to V. Lakshminarayanan who has served as CEO of Butterfly Gandhimathi Appliances Limited (NSE:BUTTERFLY) since 2011. 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 Butterfly Gandhimathi Appliances

How Does Total Compensation For V. Lakshminarayanan Compare With Other Companies In The Industry?

Our data indicates that Butterfly Gandhimathi Appliances Limited has a market capitalization of ₹9.2b, and total annual CEO compensation was reported as ₹9.5m for the year to March 2020. We note that's an increase of 61% above last year. In particular, the salary of ₹7.20m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.1m. This suggests that V. Lakshminarayanan is paid more than the median for the industry. Moreover, V. Lakshminarayanan also holds ₹533m worth of Butterfly Gandhimathi Appliances stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 97% of total compensation represents salary and 3.2% is other remuneration. It's interesting to note that Butterfly Gandhimathi Appliances allocates a smaller portion of compensation to salary 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 Butterfly Gandhimathi Appliances Limited's Growth Numbers

Butterfly Gandhimathi Appliances Limited has seen its earnings per share (EPS) increase by 59% a year over the past three years. It saw its revenue drop 7.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Butterfly Gandhimathi Appliances Limited Been A Good Investment?

Given the total shareholder loss of 7.2% over three years, many shareholders in Butterfly Gandhimathi Appliances 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...

As previously discussed, V. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think V. is earning a very handsome sum.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in Butterfly Gandhimathi Appliances we think you should know about.

Switching gears from Butterfly Gandhimathi Appliances, 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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