Shareholders Will Probably Hold Off On Increasing Centum Electronics Limited's (NSE:CENTUM) CEO Compensation For The Time Being

Under the guidance of CEO Rao Mallavarapu, Centum Electronics Limited (NSE:CENTUM) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 12 August 2021. However, some shareholders may still want to keep CEO compensation within reason.

View our latest analysis for Centum Electronics

Comparing Centum Electronics Limited's CEO Compensation With the industry

Our data indicates that Centum Electronics Limited has a market capitalization of ₹6.6b, and total annual CEO compensation was reported as ₹17m for the year to March 2021. We note that's a small decrease of 5.3% on last year. In particular, the salary of ₹8.49m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹2.7m. This suggests that Rao Mallavarapu is paid more than the median for the industry. Furthermore, Rao Mallavarapu directly owns ₹3.4b worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. Centum Electronics pays a modest slice of remuneration through salary, as compared to the broader industry. 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.

Centum Electronics Limited's Growth

Centum Electronics Limited has seen its earnings per share (EPS) increase by 38% a year over the past three years. It saw its revenue drop 7.5% over the last 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Centum Electronics Limited Been A Good Investment?

Boasting a total shareholder return of 36% over three years, Centum Electronics Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

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. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which makes us a bit uncomfortable) in Centum Electronics we think you should know about.

Switching gears from Centum Electronics, 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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