The CEO of Muthoot Finance Limited (NSE:MUTHOOTFIN) is George Muthoot, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Muthoot Finance pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Muthoot Finance
Comparing Muthoot Finance Limited's CEO Compensation With the industry
Our data indicates that Muthoot Finance Limited has a market capitalization of ₹476b, and total annual CEO compensation was reported as ₹154m for the year to March 2020. We note that's an increase of 16% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹154m.
In comparison with other companies in the industry with market capitalizations ranging from ₹291b to ₹874b, the reported median CEO total compensation was ₹11m. Hence, we can conclude that George Muthoot is remunerated higher than the industry median. Moreover, George Muthoot also holds ₹55b worth of Muthoot Finance stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹154m | ₹133m | 100% |
| Other | - | - | - |
| Total Compensation | ₹154m | ₹133m | 100% |
On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Speaking on a company level, Muthoot Finance 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.
A Look at Muthoot Finance Limited's Growth Numbers
Muthoot Finance Limited's earnings per share (EPS) grew 25% per year over the last three years. Its revenue is up 16% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Muthoot Finance Limited Been A Good Investment?
Most shareholders would probably be pleased with Muthoot Finance Limited for providing a total return of 223% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
Muthoot Finance pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, George is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that George's performance creates value for the company.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Muthoot Finance (1 can't be ignored!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About NSEI:MUTHOOTFIN
Muthoot Finance
A non-banking financing company, primarily engages in the provision of gold loan in India.
Average dividend payer and fair value.
