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Is Gandhi Special Tubes Limited's (NSE:GANDHITUBE) CEO Pay Fair?

Simply Wall St

In 1985 Manhar Gandhi was appointed CEO of Gandhi Special Tubes Limited (NSE:GANDHITUBE). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Gandhi Special Tubes

How Does Manhar Gandhi's Compensation Compare With Similar Sized Companies?

According to our data, Gandhi Special Tubes Limited has a market capitalization of ₹3.9b, and paid its CEO total annual compensation worth ₹21m over the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹12m. 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.

As you can see, Manhar Gandhi is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Gandhi Special Tubes Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Gandhi Special Tubes has changed from year to year.

NSEI:GANDHITUBE CEO Compensation, October 27th 2019

Is Gandhi Special Tubes Limited Growing?

Over the last three years Gandhi Special Tubes Limited has grown its earnings per share (EPS) by an average of 15% per year (using a line of best fit). It saw its revenue drop 12% over the last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Gandhi Special Tubes Limited Been A Good Investment?

Gandhi Special Tubes Limited has generated a total shareholder return of 2.2% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We examined the amount Gandhi Special Tubes Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven't been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. Whatever your view on compensation, you might want to check if insiders are buying or selling Gandhi Special Tubes shares (free trial).

Important note: Gandhi Special Tubes 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.