This Is The Reason Why We Think Honeywell Automation India Limited's (NSE:HONAUT) CEO Deserves A Bump Up To Their Compensation

Shareholders will be pleased by the impressive results for Honeywell Automation India Limited (NSE:HONAUT) recently and CEO Ashish Gaikwad has played a key role. This would be kept in mind at the upcoming AGM on 18 August 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

See our latest analysis for Honeywell Automation India

How Does Total Compensation For Ashish Gaikwad Compare With Other Companies In The Industry?

According to our data, Honeywell Automation India Limited has a market capitalization of ₹355b, and paid its CEO total annual compensation worth ₹33m over the year to March 2021. That is, the compensation was roughly the same as last year. We note that the salary of ₹20.1m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹149b to ₹477b, we found that the median CEO total compensation was ₹58m. Accordingly, Honeywell Automation India pays its CEO under the industry median. What's more, Ashish Gaikwad holds ₹8.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹20m	₹19m	60%
Other	₹13m	₹15m	40%
Total Compensation	₹33m	₹34m	100%

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. In Honeywell Automation India's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

A Look at Honeywell Automation India Limited's Growth Numbers

Honeywell Automation India Limited has seen its earnings per share (EPS) increase by 17% a year over the past three years. It saw its revenue drop 5.7% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Honeywell Automation India Limited Been A Good Investment?

We think that the total shareholder return of 80%, over three years, would leave most Honeywell Automation India Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

Whatever your view on compensation, you might want to check if insiders are buying or selling Honeywell Automation India shares (free trial).

Switching gears from Honeywell Automation India, 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.

If you decide to trade Honeywell Automation India, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.