Our View On Reliance Power's (NSE:RPOWER) CEO Pay

This article will reflect on the compensation paid to Raja Krotthapalli who has served as CEO of Reliance Power Limited (NSE:RPOWER) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Reliance Power.

See our latest analysis for Reliance Power

How Does Total Compensation For Raja Krotthapalli Compare With Other Companies In The Industry?

According to our data, Reliance Power Limited has a market capitalization of ₹8.8b, and paid its CEO total annual compensation worth ₹30m over the year to March 2020. That's a notable increase of 33% on last year. Notably, the salary of ₹30m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.0m. Accordingly, our analysis reveals that Reliance Power Limited pays Raja Krotthapalli north of the industry median.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. On a company level, Reliance Power prefers to reward its CEO through a salary, opting not to pay Raja Krotthapalli through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Reliance Power Limited's Growth

Over the last three years, Reliance Power Limited has shrunk its earnings per share by 94% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that EPS have declined. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Reliance Power Limited Been A Good Investment?

Given the total shareholder loss of 91% over three years, many shareholders in Reliance Power Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Reliance Power pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Reliance Power pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Reliance Power you should be aware of, and 1 of them is a bit unpleasant.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

When trading Reliance Power 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. Promoted

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.
^*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@simplywallst.com.