A Quick Analysis On Mahanagar Gas' (NSE:MGL) CEO Compensation

This article will reflect on the compensation paid to Sanjib Datta who has served as CEO of Mahanagar Gas Limited (NSE:MGL) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Mahanagar Gas

How Does Total Compensation For Sanjib Datta Compare With Other Companies In The Industry?

Our data indicates that Mahanagar Gas Limited has a market capitalization of ₹85b, and total annual CEO compensation was reported as ₹9.1m for the year to March 2020. That's a fairly small increase of 6.2% over the previous year. Notably, the salary of ₹9.1m is the entirety of the CEO compensation.

On comparing similar companies from the same industry with market caps ranging from ₹30b to ₹119b, we found that the median CEO total compensation was ₹65m. In other words, Mahanagar Gas pays its CEO lower than the industry median.

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. At the company level, Mahanagar Gas pays Sanjib Datta solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Mahanagar Gas Limited's Growth Numbers

Mahanagar Gas Limited has seen its earnings per share (EPS) increase by 16% a year over the past three years. It saw its revenue drop 15% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. 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 Mahanagar Gas Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Mahanagar Gas Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Mahanagar Gas pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, Mahanagar Gas Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. But we believe shareholders would want to see healthier returns before the CEO gets a raise.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Mahanagar Gas that investors should think about before committing capital to this stock.

Switching gears from Mahanagar Gas, 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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