How Much Is Nelco Limited (NSE:NELCO) Paying Its CEO?

Pradip Nath has been the CEO of Nelco Limited (NSE:NELCO) since 2011, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Nelco pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Nelco

How Does Total Compensation For Pradip Nath Compare With Other Companies In The Industry?

Our data indicates that Nelco Limited has a market capitalization of ₹4.8b, and total annual CEO compensation was reported as ₹27m for the year to March 2020. We note that's an increase of 17% above last year. In particular, the salary of ₹15.3m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹6.0m. Hence, we can conclude that Pradip Nath is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 80% of total compensation out of all the companies we analyzed, while other remuneration made up 20% of the pie. It's interesting to note that Nelco allocates a smaller portion of compensation to salary 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.

Nelco Limited's Growth

Over the past three years, Nelco Limited has seen its earnings per share (EPS) grow by 14% per year. In the last year, its revenue is up 5.8%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Nelco Limited Been A Good Investment?

Nelco Limited has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Nelco pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed us with its EPS growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.

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. In our study, we found 3 warning signs for Nelco you should be aware of, and 1 of them makes us a bit uncomfortable.

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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