How Does Emmbi Industries' (NSE:EMMBI) CEO Pay Compare With Company Performance?

Makrand Appalwar became the CEO of Emmbi Industries Limited (NSE:EMMBI) in 2004, 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 assess whether Emmbi Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Emmbi Industries

Comparing Emmbi Industries Limited's CEO Compensation With the industry

At the time of writing, our data shows that Emmbi Industries Limited has a market capitalization of ₹1.5b, and reported total annual CEO compensation of ₹7.8m 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 ₹7.8m.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.2m. This suggests that Makrand Appalwar is paid more than the median for the industry. What's more, Makrand Appalwar holds ₹403m 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, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. On a company level, Emmbi Industries prefers to reward its CEO through a salary, opting not to pay Makrand Appalwar through non-salary benefits. 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.

Emmbi Industries Limited's Growth

Emmbi Industries Limited has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is down 11%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Emmbi Industries Limited Been A Good Investment?

With a three year total loss of 64% for the shareholders, Emmbi Industries Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Emmbi Industries pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Emmbi Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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. That's why we did our research, and identified 4 warning signs for Emmbi Industries (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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