What We Learned About Transwarranty Finance's (NSE:TFL) CEO Pay

Kumar Nair is the CEO of Transwarranty Finance Limited (NSE:TFL), 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 Transwarranty Finance.

View our latest analysis for Transwarranty Finance

How Does Total Compensation For Kumar Nair Compare With Other Companies In The Industry?

According to our data, Transwarranty Finance Limited has a market capitalization of ₹78m, and paid its CEO total annual compensation worth ₹4.2m over the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at ₹2.27m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹1.1m. Hence, we can conclude that Kumar Nair is remunerated higher than the industry median. Moreover, Kumar Nair also holds ₹38m worth of Transwarranty Finance stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. Transwarranty Finance pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Transwarranty Finance Limited's Growth Numbers

Over the last three years, Transwarranty Finance Limited has shrunk its earnings per share by 128% per year. It saw its revenue drop 63% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Transwarranty Finance Limited Been A Good Investment?

Given the total shareholder loss of 73% over three years, many shareholders in Transwarranty Finance Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Transwarranty Finance Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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 3 warning signs for Transwarranty Finance that investors should think about before committing capital to this stock.

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.
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