Here's What We Think About La Opala RG's (NSE:LAOPALA) CEO Pay

Ajit Jhunjhunwala has been the CEO of La Opala RG Limited (NSE:LAOPALA) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for La Opala RG.

See our latest analysis for La Opala RG

How Does Total Compensation For Ajit Jhunjhunwala Compare With Other Companies In The Industry?

At the time of writing, our data shows that La Opala RG Limited has a market capitalization of ₹25b, and reported total annual CEO compensation of ₹25m for the year to March 2020. We note that's a decrease of 28% compared to last year. Notably, the salary which is ₹19.3m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from ₹15b to ₹58b, the reported median CEO total compensation was ₹25m. From this we gather that Ajit Jhunjhunwala is paid around the median for CEOs in the industry. Furthermore, Ajit Jhunjhunwala directly owns ₹2.1b worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 97% of total compensation represents salary and 3.2% is other remuneration. In La Opala RG's case, non-salary compensation represents a greater slice of total remuneration, 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 La Opala RG Limited's Growth Numbers

Over the last three years, La Opala RG Limited has shrunk its earnings per share by 14% per year. Its revenue is down 30% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 La Opala RG Limited Been A Good Investment?

Given the total shareholder loss of 31% over three years, many shareholders in La Opala RG Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, La Opala RG pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for La Opala RG that you should be aware of before investing.

Important note: La Opala RG 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. 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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