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This article will reflect on the compensation paid to Sanjay Rathi who has served as CEO of Laxmi Cotspin Limited (NSE:LAXMICOT) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Laxmi Cotspin
How Does Total Compensation For Sanjay Rathi Compare With Other Companies In The Industry?
At the time of writing, our data shows that Laxmi Cotspin Limited has a market capitalization of ₹176m, and reported total annual CEO compensation of ₹4.1m for the year to March 2020. That is, the compensation was roughly the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹4.1m.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.0m. So it looks like Laxmi Cotspin compensates Sanjay Rathi in line with the median for the industry. What's more, Sanjay Rathi holds ₹2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. On a company level, Laxmi Cotspin prefers to reward its CEO through a salary, opting not to pay Sanjay Rathi through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Laxmi Cotspin Limited's Growth
Over the last three years, Laxmi Cotspin Limited has shrunk its earnings per share by 36% per year. Its revenue is down 15% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Laxmi Cotspin Limited Been A Good Investment?
With a three year total loss of 34% for the shareholders, Laxmi Cotspin Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Laxmi Cotspin pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Laxmi Cotspin Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Laxmi Cotspin that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About NSEI:LAXMICOT
Laxmi Cotspin
Engages in the processing of textiles in India.
Slight risk with mediocre balance sheet.
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