This Is The Reason Why We Think Mahanagar Gas Limited's (NSE:MGL) CEO Deserves A Bump Up To Their Compensation

The impressive results at Mahanagar Gas Limited (NSE:MGL) recently will be great news for shareholders. At the upcoming AGM on 28 September 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Mahanagar Gas

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

At the time of writing, our data shows that Mahanagar Gas Limited has a market capitalization of ₹109b, and reported total annual CEO compensation of ₹10m for the year to March 2021. That's a notable increase of 15% on last year. We note that the salary portion, which stands at ₹9.10m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between ₹74b and ₹236b had a median total CEO compensation of ₹125m. This suggests that Sanjib Datta is paid below the industry median.

Component	2021	2020	Proportion (2021)
Salary	₹9.1m	₹7.1m	87%
Other	₹1.3m	₹2.0m	13%
Total Compensation	₹10m	₹9.1m	100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. Mahanagar Gas is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Mahanagar Gas Limited's Growth

Mahanagar Gas Limited has seen its earnings per share (EPS) increase by 17% a year over the past three years. It achieved revenue growth of 1.2% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Mahanagar Gas Limited Been A Good Investment?

We think that the total shareholder return of 45%, over three years, would leave most Mahanagar Gas Limited shareholders smiling. 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Mahanagar Gas that you should be aware of before investing.

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. 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.
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