What Can We Make Of Orient Paper & Industries' (NSE:ORIENTPPR) CEO Compensation?

This article will reflect on the compensation paid to Manohar Pachisia who has served as CEO of Orient Paper & Industries Limited (NSE:ORIENTPPR) since 1991. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Orient Paper & Industries.

See our latest analysis for Orient Paper & Industries

How Does Total Compensation For Manohar Pachisia Compare With Other Companies In The Industry?

At the time of writing, our data shows that Orient Paper & Industries Limited has a market capitalization of ₹4.6b, and reported total annual CEO compensation of ₹41m for the year to March 2020. Notably, that's a decrease of 20% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹15m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹7.3m. Accordingly, our analysis reveals that Orient Paper & Industries Limited pays Manohar Pachisia north of the industry median. What's more, Manohar Pachisia holds ₹827k 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, roughly 89% of total compensation represents salary and 11% is other remuneration. Orient Paper & Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Orient Paper & Industries Limited's Growth

Over the last three years, Orient Paper & Industries Limited has shrunk its earnings per share by 46% per year. Its revenue is down 33% over the previous year.

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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Orient Paper & Industries Limited Been A Good Investment?

Given the total shareholder loss of 85% over three years, many shareholders in Orient Paper & Industries Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Orient Paper & Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Orient Paper & Industries that investors should be aware of in a dynamic business environment.

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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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