How Should Investors React To Manaksia Aluminium's (NSE:MANAKALUCO) CEO Pay?

This article will reflect on the compensation paid to Sunil Agrawal who has served as CEO of Manaksia Aluminium Company Limited (NSE:MANAKALUCO) since 2014. This analysis will also assess whether Manaksia Aluminium pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Manaksia Aluminium

How Does Total Compensation For Sunil Agrawal Compare With Other Companies In The Industry?

According to our data, Manaksia Aluminium Company Limited has a market capitalization of ₹634m, and paid its CEO total annual compensation worth ₹13m over the year to March 2020. That is, the compensation was roughly the same as last year. Notably, the salary of ₹13m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.1m. This suggests that Sunil Agrawal is paid more than the median for the industry. Moreover, Sunil Agrawal also holds ₹57m worth of Manaksia Aluminium stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 99% of total compensation represents salary and 1.1% is other remuneration. At the company level, Manaksia Aluminium pays Sunil Agrawal solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Manaksia Aluminium Company Limited's Growth

Over the last three years, Manaksia Aluminium Company Limited has shrunk its earnings per share by 13% per year. Its revenue is down 14% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Manaksia Aluminium Company Limited Been A Good Investment?

Given the total shareholder loss of 46% over three years, many shareholders in Manaksia Aluminium Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Manaksia Aluminium rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Manaksia Aluminium Company 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. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 2 warning signs for Manaksia Aluminium (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Manaksia Aluminium, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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