Is Century Enka Limited's (NSE:CENTENKA) CEO Pay Justified?

By
Simply Wall St
Published
November 12, 2019
NSEI:CENTENKA

Omprakash Chitlange has been the CEO of Century Enka Limited (NSE:CENTENKA) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Century Enka

How Does Omprakash Chitlange's Compensation Compare With Similar Sized Companies?

Our data indicates that Century Enka Limited is worth ₹4.1b, and total annual CEO compensation was reported as ₹34m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹27m. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹2.4m.

As you can see, Omprakash Chitlange is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Century Enka 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.

You can see, below, how CEO compensation at Century Enka has changed over time.

NSEI:CENTENKA CEO Compensation, November 13th 2019
NSEI:CENTENKA CEO Compensation, November 13th 2019

Is Century Enka Limited Growing?

On average over the last three years, Century Enka Limited has grown earnings per share (EPS) by 1.4% each year (using a line of best fit). It saw its revenue drop 1.8% over the last year.

I generally like to see a little revenue growth, but the improvement in EPS is good. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Century Enka Limited Been A Good Investment?

Given the total loss of 28% over three years, many shareholders in Century Enka 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...

We examined the amount Century Enka Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling Century Enka shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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