In 2007, Sanjay Chamria was appointed CEO of Magma Fincorp Limited (NSE:MAGMA). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Magma Fincorp
How Does Sanjay Chamria's Compensation Compare With Similar Sized Companies?
According to our data, Magma Fincorp Limited has a market capitalization of ₹3.9b, and paid its CEO total annual compensation worth ₹49m over the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹22m. We examined a group of similar sized companies, with market capitalizations of below ₹15b. The median CEO total compensation in that group is ₹3.8m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Magma Fincorp stands. Taking a bird's eye view of the industry, we see that a majority of companies prefer paying their CEOs through salaries, as opposed to non-salary compensation. Magma Fincorp sets aside a smaller share of compensation for salary, in comparison to the overall industry.
As you can see, Sanjay Chamria is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Magma Fincorp Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see a visual representation of the CEO compensation at Magma Fincorp, below.
Is Magma Fincorp Limited Growing?
Magma Fincorp Limited has seen earnings per share (EPS) move positively by an average of 33% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 21%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. You might want to check this free visual report on analyst forecasts for future earnings.
Has Magma Fincorp Limited Been A Good Investment?
With a three year total loss of 89%, Magma Fincorp Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
We examined the amount Magma Fincorp 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, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. On another note, Magma Fincorp has 4 warning signs (and 1 which can't be ignored) we think you should know about.
Important note: Magma Fincorp may not be the best stock to buy. 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. Thank you for reading.