Here's What We Think About Lux Industries' (NSE:LUXIND) CEO Pay

Pradip Todi is the CEO of Lux Industries Limited (NSE:LUXIND), and in this article, we analyze the executive's compensation package 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 Lux Industries.

Check out our latest analysis for Lux Industries

Comparing Lux Industries Limited's CEO Compensation With the industry

According to our data, Lux Industries Limited has a market capitalization of ₹42b, and paid its CEO total annual compensation worth ₹30m over the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of ₹30m is the entirety of the CEO compensation.

For comparison, other companies in the same industry with market capitalizations ranging between ₹15b and ₹58b had a median total CEO compensation of ₹25m. This suggests that Lux Industries remunerates its CEO largely in line with the industry average. What's more, Pradip Todi holds ₹11b 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, Lux Industries prefers to tread along a traditional path, disbursing all compensation through a salary. 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.

Lux Industries Limited's Growth

Lux Industries Limited's earnings per share (EPS) grew 31% per year over the last three years. Its revenue is down 4.8% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Lux Industries Limited Been A Good Investment?

With a three year total loss of 2.2% for the shareholders, Lux Industries Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Lux Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Lux Industries pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Pradip is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

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 1 warning sign for Lux Industries that you should be aware of before investing.

Important note: Lux Industries 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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