How Much Does IFB Agro Industries' (NSE:IFBAGRO) CEO Make?

Arup Banerjee became the CEO of IFB Agro Industries Limited (NSE:IFBAGRO) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether IFB Agro Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for IFB Agro Industries

Comparing IFB Agro Industries Limited's CEO Compensation With the industry

At the time of writing, our data shows that IFB Agro Industries Limited has a market capitalization of ₹4.4b, and reported total annual CEO compensation of ₹20m for the year to March 2020. That is, the compensation was roughly the same as last year. Notably, the salary of ₹20m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.6m. This suggests that Arup Banerjee is paid more than the median for the industry.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Speaking on a company level, IFB Agro Industries prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at IFB Agro Industries Limited's Growth Numbers

Over the last three years, IFB Agro Industries Limited has shrunk its earnings per share by 13% per year. It saw its revenue drop 17% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has IFB Agro Industries Limited Been A Good Investment?

Since shareholders would have lost about 44% over three years, some IFB Agro Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

IFB Agro Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Arup is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for IFB Agro Industries (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: IFB Agro Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. 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.
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