How Should Investors Feel About Century Extrusions' (NSE:CENTEXT) CEO Remuneration?

Simply Wall St
February 10, 2021
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This article will reflect on the compensation paid to Vikram Jhunjhunwala who has served as CEO of Century Extrusions Limited (NSE:CENTEXT) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Century Extrusions.

Check out our latest analysis for Century Extrusions

How Does Total Compensation For Vikram Jhunjhunwala Compare With Other Companies In The Industry?

At the time of writing, our data shows that Century Extrusions Limited has a market capitalization of ₹376m, and reported total annual CEO compensation of ₹3.8m for the year to March 2020. That is, the compensation was roughly the same as last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹3.8m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.2m. From this we gather that Vikram Jhunjhunwala is paid around the median for CEOs in the industry. Moreover, Vikram Jhunjhunwala also holds ₹15m worth of Century Extrusions stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary ₹3.8m ₹3.8m 100%
Other - - -
Total Compensation₹3.8m ₹3.8m100%

On an industry level, around 99% of total compensation represents salary and 1.1% is other remuneration. At the company level, Century Extrusions pays Vikram Jhunjhunwala solely through a salary, preferring to go down a conventional route. 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.

NSEI:CENTEXT CEO Compensation February 11th 2021

Century Extrusions Limited's Growth

Century Extrusions Limited has reduced its earnings per share by 31% a year over the last three years. In the last year, its revenue is down 23%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Century Extrusions Limited Been A Good Investment?

Given the total shareholder loss of 36% over three years, many shareholders in Century Extrusions Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Century Extrusions rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Century Extrusions pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which are a bit concerning) in Century Extrusions we think you should know about.

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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