A Look At Clariant Chemicals (India)'s (NSE:CLNINDIA) CEO Remuneration

Adnan Ahmad became the CEO of Clariant Chemicals (India) Limited (NSE:CLNINDIA) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Clariant Chemicals (India)

How Does Total Compensation For Adnan Ahmad Compare With Other Companies In The Industry?

At the time of writing, our data shows that Clariant Chemicals (India) Limited has a market capitalization of ₹8.7b, and reported total annual CEO compensation of ₹47m for the year to March 2020. We note that's a decrease of 9.9% compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹47m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.8m. Hence, we can conclude that Adnan Ahmad is remunerated higher than the industry median.

Speaking on an industry level, nearly 90% of total compensation represents salary, while the remainder of 10% is other remuneration. Speaking on a company level, Clariant Chemicals (India) prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Clariant Chemicals (India) Limited's Growth Numbers

Over the past three years, Clariant Chemicals (India) Limited has seen its earnings per share (EPS) grow by 171% per year. It saw its revenue drop 38% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Clariant Chemicals (India) Limited Been A Good Investment?

Given the total shareholder loss of 5.4% over three years, many shareholders in Clariant Chemicals (India) Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Clariant Chemicals (India) pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Clariant Chemicals (India) 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. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Clariant Chemicals (India) (2 make us uncomfortable!) that you should be aware of before investing here.

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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