Is Honeywell Automation India Limited's (NSE:HONAUT) CEO Salary Justified?

By
Simply Wall St
Published
January 02, 2020
NSEI:HONAUT

In 2016 M. Gaikwad was appointed CEO of Honeywell Automation India Limited (NSE:HONAUT). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Honeywell Automation India

How Does M. Gaikwad's Compensation Compare With Similar Sized Companies?

According to our data, Honeywell Automation India Limited has a market capitalization of ₹243b, and paid its CEO total annual compensation worth ₹31m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at ₹12m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of ₹142b to ₹455b. The median total CEO compensation was ₹54m.

Most shareholders would consider it a positive that M. Gaikwad takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Honeywell Automation India has changed over time.

NSEI:HONAUT CEO Compensation, January 2nd 2020
NSEI:HONAUT CEO Compensation, January 2nd 2020

Is Honeywell Automation India Limited Growing?

On average over the last three years, Honeywell Automation India Limited has grown earnings per share (EPS) by 34% each year (using a line of best fit). In the last year, its revenue is up 13%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Honeywell Automation India Limited Been A Good Investment?

Most shareholders would probably be pleased with Honeywell Automation India Limited for providing a total return of 196% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

It appears that Honeywell Automation India Limited remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that M. Gaikwad deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. So you may want to check if insiders are buying Honeywell Automation India shares with their own money (free access).

If you want to buy a stock that is better than Honeywell Automation India, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

Promoted
When trading Honeywell Automation India or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record. Learn more about the team behind Simply Wall St.