In This Article:
Pradip Nath has been the CEO of Nelco Limited (NSE:NELCO) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
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How Does Pradip Nath's Compensation Compare With Similar Sized Companies?
Our data indicates that Nelco Limited is worth ₹5.9b, and total annual CEO compensation was reported as ₹23m for the year to March 2019. That's a notable increase of 32% on last year. Notably, the salary of ₹23m is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹2.4m.
Thus we can conclude that Pradip Nath receives more in total compensation than the median of a group of companies in the same market, and of similar size to Nelco Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Nelco has changed from year to year.
Is Nelco Limited Growing?
Over the last three years Nelco Limited has grown its earnings per share (EPS) by an average of 53% per year (using a line of best fit). In the last year, its revenue is up 18%.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Nelco Limited Been A Good Investment?
Boasting a total shareholder return of 184% over three years, Nelco Limited has done well by shareholders. 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.
In Summary...
We compared total CEO remuneration at Nelco Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Nelco insiders are buying or selling shares.