How Is Bodal Chemicals' (NSE:BODALCHEM) CEO Compensated?

Sureshbhai Patel is the CEO of Bodal Chemicals Limited (NSE:BODALCHEM), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Bodal Chemicals

Comparing Bodal Chemicals Limited's CEO Compensation With the industry

Our data indicates that Bodal Chemicals Limited has a market capitalization of ₹8.6b, and total annual CEO compensation was reported as ₹55m for the year to March 2020. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹16m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹6.5m. This suggests that Sureshbhai Patel is paid more than the median for the industry. What's more, Sureshbhai Patel holds ₹3.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. In Bodal Chemicals' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Bodal Chemicals Limited's Growth Numbers

Bodal Chemicals Limited has reduced its earnings per share by 32% a year over the last three years. In the last year, its revenue is down 14%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-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 Bodal Chemicals Limited Been A Good Investment?

With a three year total loss of 48% for the shareholders, Bodal Chemicals Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Bodal Chemicals Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Bodal Chemicals you should be aware of, and 1 of them shouldn't be ignored.

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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