Most Shareholders Will Probably Agree With Tech Mahindra Limited's (NSE:TECHM) CEO Compensation

By
Simply Wall St
Published
July 23, 2021
NSEI:TECHM
Source: Shutterstock

Under the guidance of CEO CP Gurnani, Tech Mahindra Limited (NSE:TECHM) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 30 July 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Tech Mahindra

Comparing Tech Mahindra Limited's CEO Compensation With the industry

At the time of writing, our data shows that Tech Mahindra Limited has a market capitalization of ₹989b, and reported total annual CEO compensation of ₹144m for the year to March 2021. We note that's a decrease of 50% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹27m.

In comparison with other companies in the industry with market capitalizations over ₹596b , the reported median total CEO compensation was ₹204m. From this we gather that CP Gurnani is paid around the median for CEOs in the industry. Moreover, CP Gurnani also holds ₹7.9b worth of Tech Mahindra stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary ₹27m ₹28m 19%
Other ₹117m ₹259m 81%
Total Compensation₹144m ₹287m100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Tech Mahindra sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NSEI:TECHM CEO Compensation July 24th 2021

A Look at Tech Mahindra Limited's Growth Numbers

Tech Mahindra Limited's earnings per share (EPS) grew 5.6% per year over the last three years. It achieved revenue growth of 2.7% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Tech Mahindra Limited Been A Good Investment?

We think that the total shareholder return of 92%, over three years, would leave most Tech Mahindra Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Tech Mahindra that investors should look into moving forward.

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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