How Should Investors React To Gillette India's (NSE:GILLETTE) CEO Pay?

Madhusudan Gopalan became the CEO of Gillette India Limited (NSE:GILLETTE) in 2018, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Gillette India.

See our latest analysis for Gillette India

Comparing Gillette India Limited's CEO Compensation With the industry

At the time of writing, our data shows that Gillette India Limited has a market capitalization of ₹192b, and reported total annual CEO compensation of ₹8.6m for the year to June 2020. That's a notable increase of 29% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹8.6m.

On comparing similar companies from the same industry with market caps ranging from ₹147b to ₹469b, we found that the median CEO total compensation was ₹54m. In other words, Gillette India pays its CEO lower than the industry median.

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. At the company level, Gillette India pays Madhusudan Gopalan solely through a salary, preferring to go down a conventional route. 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 Gillette India Limited's Growth Numbers

Gillette India Limited saw earnings per share stay pretty flat over the last three years. Its revenue is down 7.2% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Gillette India Limited Been A Good Investment?

Since shareholders would have lost about 10% over three years, some Gillette India Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Gillette India pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Gillette India pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But then, EPS growth is lacking and so are the returns to shareholders. We're not critical of the remuneration Madhusudan receives, but it would be good to see improved returns to shareholders before compensation grows too much.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Gillette India that investors should think about before committing capital to this stock.

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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