Why We Think Johnson Controls-Hitachi Air Conditioning India Limited's (NSE:JCHAC) CEO Compensation Is Not Excessive At All

Performance at Johnson Controls-Hitachi Air Conditioning India Limited (NSE:JCHAC) has been reasonably good and CEO Gurmeet Singh has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 15 September 2021. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Johnson Controls-Hitachi Air Conditioning India

How Does Total Compensation For Gurmeet Singh Compare With Other Companies In The Industry?

According to our data, Johnson Controls-Hitachi Air Conditioning India Limited has a market capitalization of ₹61b, and paid its CEO total annual compensation worth ₹23m over the year to March 2021. Notably, that's an increase of 22% over the year before. Notably, the salary which is ₹20.6m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between ₹29b and ₹117b, we discovered that the median CEO total compensation of that group was ₹25m. This suggests that Johnson Controls-Hitachi Air Conditioning India remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	₹21m	₹16m	89%
Other	₹2.5m	₹3.1m	11%
Total Compensation	₹23m	₹19m	100%

Talking in terms of the industry, salary represented approximately 98% of total compensation out of all the companies we analyzed, while other remuneration made up 2% of the pie. Johnson Controls-Hitachi Air Conditioning India is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Johnson Controls-Hitachi Air Conditioning India Limited's Growth

Over the last three years, Johnson Controls-Hitachi Air Conditioning India Limited has shrunk its earnings per share by 20% per year. Its revenue is up 24% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Johnson Controls-Hitachi Air Conditioning India Limited Been A Good Investment?

With a total shareholder return of 29% over three years, Johnson Controls-Hitachi Air Conditioning India Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

The overall company performance has been commendable, however there are still areas for improvement. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Johnson Controls-Hitachi Air Conditioning India that investors should look into moving forward.

Important note: Johnson Controls-Hitachi Air Conditioning India 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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