Adit Gupta has been the CEO of AMD Industries Limited (NSE:AMDIND) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether AMD Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for AMD Industries
How Does Total Compensation For Adit Gupta Compare With Other Companies In The Industry?
Our data indicates that AMD Industries Limited has a market capitalization of ₹345m, and total annual CEO compensation was reported as ₹12m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of ₹10.6m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.2m. Hence, we can conclude that Adit Gupta is remunerated higher than the industry median. Moreover, Adit Gupta also holds ₹110m worth of AMD Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹11m | ₹11m | 90% |
| Other | ₹1.2m | ₹1.2m | 10% |
| Total Compensation | ₹12m | ₹12m | 100% |
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. It's interesting to note that AMD Industries allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
AMD Industries Limited's Growth
Over the last three years, AMD Industries Limited has shrunk its earnings per share by 1.5% per year. In the last year, its revenue is down 30%.
The lack of EPS growth is certainly unimpressive. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 AMD Industries Limited Been A Good Investment?
With a three year total loss of 53% for the shareholders, AMD Industries Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As previously discussed, Adit is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past 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.
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 2 warning signs for AMD Industries that you should be aware of before investing.
Important note: AMD 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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About NSEI:AMDIND
Adequate balance sheet and slightly overvalued.
