Should You Worry About Jyothy Labs Limited’s (NSE:JYOTHYLAB) CEO Pay?

Moothedath Ramachandran became the CEO of Jyothy Labs Limited (NSE:JYOTHYLAB) in 1983. 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Jyothy Labs

How Does Moothedath Ramachandran’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Jyothy Labs Limited has a market cap of ₹58b, and reported total annual CEO compensation of ₹48m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹1.0. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from ₹28b to ₹113b, and the median CEO total compensation was ₹28m.

It would therefore appear that Jyothy Labs Limited pays Moothedath Ramachandran 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Jyothy Labs has changed from year to year.

NSEI:JYOTHYLAB CEO Compensation, January 16th 2020
NSEI:JYOTHYLAB CEO Compensation, January 16th 2020

Is Jyothy Labs Limited Growing?

On average over the last three years, Jyothy Labs Limited has grown earnings per share (EPS) by 2.7% each year (using a line of best fit). It achieved revenue growth of 7.7% over the last year.

I would argue that the improvement in revenue isn’t particularly impressive, but it is good to see 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 Jyothy Labs Limited Been A Good Investment?

With a three year total loss of 5.4%, Jyothy Labs Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by Jyothy Labs Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Jyothy Labs (free visualization of insider trades).

Important note: Jyothy Labs 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.