Key Things To Understand About Celebrity Fashions' (NSE:CELEBRITY) CEO Pay Cheque

Vidyuth Rajagopal became the CEO of Celebrity Fashions Limited (NSE:CELEBRITY) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Celebrity Fashions pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Celebrity Fashions

How Does Total Compensation For Vidyuth Rajagopal Compare With Other Companies In The Industry?

According to our data, Celebrity Fashions Limited has a market capitalization of ₹338m, and paid its CEO total annual compensation worth ₹4.5m over the year to March 2020. We note that's an increase of 48% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹4.5m.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.6m. From this we gather that Vidyuth Rajagopal is paid around the median for CEOs in the industry. What's more, Vidyuth Rajagopal holds ₹226k 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, all of total compensation represents salary, while non-salary remuneration is completely ignored. Speaking on a company level, Celebrity Fashions prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Celebrity Fashions Limited's Growth

Celebrity Fashions Limited's earnings per share (EPS) grew 18% per year over the last three years. It saw its revenue drop 11% 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 Celebrity Fashions Limited Been A Good Investment?

Given the total shareholder loss of 63% over three years, many shareholders in Celebrity Fashions Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Celebrity Fashions pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Vidyuth is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Vidyuth is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 3 which are a bit unpleasant) in Celebrity Fashions we think you should know about.

Important note: Celebrity Fashions is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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