What Did Kanoria Chemicals & Industries' (NSE:KANORICHEM) CEO Take Home Last Year?

This article will reflect on the compensation paid to Rajya Kanoria who has served as CEO of Kanoria Chemicals & Industries Limited (NSE:KANORICHEM) since 2003. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Kanoria Chemicals & Industries.

Check out our latest analysis for Kanoria Chemicals & Industries

How Does Total Compensation For Rajya Kanoria Compare With Other Companies In The Industry?

According to our data, Kanoria Chemicals & Industries Limited has a market capitalization of ₹2.7b, and paid its CEO total annual compensation worth ₹21m over the year to March 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of ₹12.1m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹6.5m. Accordingly, our analysis reveals that Kanoria Chemicals & Industries Limited pays Rajya Kanoria north of the industry median. Moreover, Rajya Kanoria also holds ₹29m worth of Kanoria Chemicals & Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Kanoria Chemicals & Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Kanoria Chemicals & Industries Limited's Growth

Kanoria Chemicals & Industries Limited has reduced its earnings per share by 53% a year over the last three years. In the last year, its revenue is down 4.9%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kanoria Chemicals & Industries Limited Been A Good Investment?

Since shareholders would have lost about 16% over three years, some Kanoria Chemicals & Industries Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Rajya is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 make us uncomfortable) in Kanoria Chemicals & Industries we think you should know about.

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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