Why Tata Metaliks' (NSE:TATAMETALI) CEO Pay Matters

Sandeep Kumar became the CEO of Tata Metaliks Limited (NSE:TATAMETALI) 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Tata Metaliks

How Does Total Compensation For Sandeep Kumar Compare With Other Companies In The Industry?

At the time of writing, our data shows that Tata Metaliks Limited has a market capitalization of ₹19b, and reported total annual CEO compensation of ₹16m for the year to March 2020. Notably, that's an increase of 17% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹3.8m.

On examining similar-sized companies in the industry with market capitalizations between ₹7.3b and ₹29b, we discovered that the median CEO total compensation of that group was ₹29m. In other words, Tata Metaliks pays its CEO lower than the industry median.

On an industry level, around 98% of total compensation represents salary and 1.6% is other remuneration. Tata Metaliks pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Tata Metaliks Limited's Growth Numbers

Tata Metaliks Limited has seen its earnings per share (EPS) increase by 12% a year over the past three years. Its revenue is down 18% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Tata Metaliks Limited Been A Good Investment?

Given the total shareholder loss of 26% over three years, many shareholders in Tata Metaliks Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Sandeep is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Sandeep is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Tata Metaliks 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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