Is Edelweiss Financial Services Limited (NSE:EDELWEISS) Overpaying Its CEO?

The CEO of Edelweiss Financial Services Limited (NSE:EDELWEISS) is Rashesh Shah. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Edelweiss Financial Services

How Does Rashesh Shah’s Compensation Compare With Similar Sized Companies?

Our data indicates that Edelweiss Financial Services Limited is worth ₹109b, and total annual CEO compensation was reported as ₹73m for the year to March 2019. That’s a notable increase of 13% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at ₹13m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from ₹71b to ₹227b, and discovered that the median CEO total compensation of that group was ₹45m.

It would therefore appear that Edelweiss Financial Services Limited pays Rashesh Shah more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. 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 Edelweiss Financial Services has changed over time.

NSEI:EDELWEISS CEO Compensation, September 25th 2019
NSEI:EDELWEISS CEO Compensation, September 25th 2019

Is Edelweiss Financial Services Limited Growing?

Over the last three years Edelweiss Financial Services Limited has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). In the last year, its revenue changed by just 0.9%.

This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.

Has Edelweiss Financial Services Limited Been A Good Investment?

Given the total loss of 1.2% over three years, many shareholders in Edelweiss Financial Services Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We examined the amount Edelweiss Financial Services Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. This doesn’t look great when you consider CEO remuneration is up on last year. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Edelweiss Financial Services insiders are buying or selling shares.

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.

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.