Ashwani Arora has been the CEO of LT Foods Limited (NSE:DAAWAT) since 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ashwani Arora’s Compensation Compare With Similar Sized Companies?
Our data indicates that LT Foods Limited is worth ₹8.7b, and total annual CEO compensation was reported as ₹21m for the year to March 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth ₹21m. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹3.5m.
It would therefore appear that LT Foods Limited pays Ashwani Arora 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. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at LT Foods has changed over time.
Is LT Foods Limited Growing?
Over the last three years LT Foods Limited has grown its earnings per share (EPS) by an average of 4.4% per year (using a line of best fit). It achieved revenue growth of 8.2% over the last year.
I’m not particularly impressed by the revenue growth, but I’m happy with the modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing. You might want to check this free visual report on analyst forecasts for future earnings.
Has LT Foods Limited Been A Good Investment?
With a three year total loss of 28%, LT Foods Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at LT Foods Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling LT Foods shares (free trial).
Important note: LT Foods 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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