What Can We Make Of Mold-Tek Packaging's (NSE:MOLDTKPAC) CEO Compensation?

This article will reflect on the compensation paid to Lakshmana Janumahanti who has served as CEO of Mold-Tek Packaging Limited (NSE:MOLDTKPAC) since 2008. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mold-Tek Packaging.

Check out our latest analysis for Mold-Tek Packaging

How Does Total Compensation For Lakshmana Janumahanti Compare With Other Companies In The Industry?

At the time of writing, our data shows that Mold-Tek Packaging Limited has a market capitalization of ₹8.2b, and reported total annual CEO compensation of ₹14m for the year to March 2020. That's a slightly lower by 6.3% over the previous year. Notably, the salary which is ₹12.4m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹3.9m. Hence, we can conclude that Lakshmana Janumahanti is remunerated higher than the industry median. Moreover, Lakshmana Janumahanti also holds ₹765m worth of Mold-Tek Packaging stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. It's interesting to note that Mold-Tek Packaging allocates a smaller portion of compensation to salary in comparison to the broader industry. 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.

Mold-Tek Packaging Limited's Growth

Over the past three years, Mold-Tek Packaging Limited has seen its earnings per share (EPS) grow by 5.9% per year. Its revenue is down 9.8% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Mold-Tek Packaging Limited Been A Good Investment?

With a three year total loss of 4.1% for the shareholders, Mold-Tek Packaging Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Mold-Tek Packaging pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The growth in the business has been uninspiring, but the shareholder returns for Mold-Tek Packaging have arguably been worse, over the last three years. And the situation doesn't look all that good when you see Lakshmana is remunerated higher than the industry average. Taking all this into account, it could be hard to get shareholder support for giving Lakshmana a raise.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Mold-Tek Packaging that investors should be aware of in a dynamic business environment.

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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