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Is Asian Hotels (East) Limited's (NSE:AHLEAST) CEO Salary Justified?

Simply Wall St

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Umesh Saraf has been the CEO of Asian Hotels (East) Limited (NSE:AHLEAST) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Asian Hotels (East)

How Does Umesh Saraf's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Asian Hotels (East) Limited has a market cap of ₹2.2b, and is paying total annual CEO compensation of ₹16m. (This number is for the twelve months until March 2018). While we always look at total compensation first, we note that the salary component is less, at ₹11m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.3m.

As you can see, Umesh Saraf is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Asian Hotels (East) Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Asian Hotels (East) has changed over time.

NSEI:AHLEAST CEO Compensation, June 18th 2019

Is Asian Hotels (East) Limited Growing?

On average over the last three years, Asian Hotels (East) Limited has shrunk earnings per share by 23% each year (measured with a line of best fit). In the last year, its revenue is up 6.7%.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Asian Hotels (East) Limited Been A Good Investment?

Asian Hotels (East) Limited has not done too badly by shareholders, with a total return of 6.1%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We examined the amount Asian Hotels (East) Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

And shareholder returns are decent but not great. So we doubt many shareholders would consider the CEO pay to be particularly modest! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Asian Hotels (East) (free visualization of insider trades).

Important note: Asian Hotels (East) may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.