The CEO of Atul Ltd (NSE:ATUL) is Sunil Lalbhai, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Atul pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Atul
Comparing Atul Ltd's CEO Compensation With the industry
At the time of writing, our data shows that Atul Ltd has a market capitalization of ₹194b, and reported total annual CEO compensation of ₹120m for the year to March 2020. We note that's an increase of 19% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹39m.
For comparison, other companies in the same industry with market capitalizations ranging between ₹145b and ₹463b had a median total CEO compensation of ₹67m. This suggests that Sunil Lalbhai is paid more than the median for the industry. Furthermore, Sunil Lalbhai directly owns ₹851m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹39m | ₹34m | 32% |
| Other | ₹81m | ₹67m | 68% |
| Total Compensation | ₹120m | ₹101m | 100% |
Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. It's interesting to note that Atul allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Atul Ltd's Growth
Atul Ltd has seen its earnings per share (EPS) increase by 31% a year over the past three years. It saw its revenue drop 14% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Atul Ltd Been A Good Investment?
Most shareholders would probably be pleased with Atul Ltd for providing a total return of 151% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As we noted earlier, Atul pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. Given the strong history of shareholder returns, the shareholders are probably very happy with Sunil's performance.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Atul (free visualization of insider trades).
Important note: Atul 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:ATUL
Atul
Manufactures and sells chemicals and other chemical products worldwide.
Excellent balance sheet with reasonable growth potential and pays a dividend.
