What Does MPS' (NSE:MPSLTD) CEO Pay Reveal?

Rahul Arora has been the CEO of MPS Limited (NSE:MPSLTD) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for MPS

Comparing MPS Limited's CEO Compensation With the industry

At the time of writing, our data shows that MPS Limited has a market capitalization of ₹6.6b, and reported total annual CEO compensation of ₹25m for the year to March 2020. We note that's an increase of 9.3% above last year. Notably, the salary of ₹25m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹13m. This suggests that Rahul Arora is paid more than the median for the industry.

Talking in terms of the industry, salary represented approximately 98% of total compensation out of all the companies we analyzed, while other remuneration made up 2.3% of the pie. Speaking on a company level, MPS prefers to tread along a traditional path, disbursing all compensation through a salary. 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.

A Look at MPS Limited's Growth Numbers

Over the last three years, MPS Limited has shrunk its earnings per share by 11% per year. Its revenue is down 4.1% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has MPS Limited Been A Good Investment?

Given the total shareholder loss of 34% over three years, many shareholders in MPS Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

MPS rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, MPS 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. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for MPS that investors should be aware of in a dynamic business environment.

Switching gears from MPS, 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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