Does India Globalization Capital's (NYSEMKT:IGC) CEO Salary Compare Well With Industry Peers?

Ram Mukunda became the CEO of India Globalization Capital, Inc. (NYSEMKT:IGC) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for India Globalization Capital.

See our latest analysis for India Globalization Capital

How Does Total Compensation For Ram Mukunda Compare With Other Companies In The Industry?

Our data indicates that India Globalization Capital, Inc. has a market capitalization of US$82m, and total annual CEO compensation was reported as US$719k for the year to March 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$300k.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$719k. This suggests that India Globalization Capital remunerates its CEO largely in line with the industry average. Furthermore, Ram Mukunda directly owns US$6.4m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 23% of total compensation represents salary and 77% is other remuneration. India Globalization Capital is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

India Globalization Capital, Inc.'s Growth

India Globalization Capital, Inc. has reduced its earnings per share by 42% a year over the last three years. In the last year, its revenue is down 85%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has India Globalization Capital, Inc. Been A Good Investment?

Most shareholders would probably be pleased with India Globalization Capital, Inc. for providing a total return of 155% over three years. 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.

To Conclude...

As we noted earlier, India Globalization Capital pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 7 warning signs for India Globalization Capital (3 make us uncomfortable!) that you should be aware of before investing here.

Important note: India Globalization Capital is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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