Manubhai Rathod became the CEO of Orient Abrasives Limited (NSE:ORIENTABRA) 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Orient Abrasives.
Comparing Orient Abrasives Limited's CEO Compensation With the industry
At the time of writing, our data shows that Orient Abrasives Limited has a market capitalization of ₹3.2b, and reported total annual CEO compensation of ₹4.3m for the year to March 2020. That's a notable increase of 11% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹4.3m.
In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹4.1m. So it looks like Orient Abrasives compensates Manubhai Rathod in line with the median for the industry. Furthermore, Manubhai Rathod directly owns ₹783k worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 99% of total compensation represents salary and 1.1% is other remuneration. At the company level, Orient Abrasives pays Manubhai Rathod 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.
Orient Abrasives Limited's Growth
Orient Abrasives Limited's earnings per share (EPS) grew 37% per year over the last three years. It saw its revenue drop 9.8% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Orient Abrasives Limited Been A Good Investment?
Given the total shareholder loss of 49% over three years, many shareholders in Orient Abrasives Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Orient Abrasives rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Manubhai is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Manubhai is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Orient Abrasives that you should be aware of before investing.
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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