Apparao Mallavarapu has been the CEO of Centum Electronics Limited (NSE:CENTUM) since 1994. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Apparao Mallavarapu's Compensation Compare With Similar Sized Companies?
Our data indicates that Centum Electronics Limited is worth ₹4.9b, and total annual CEO compensation was reported as ₹17m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹9.1m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹2.4m.
Thus we can conclude that Apparao Mallavarapu receives more in total compensation than the median of a group of companies in the same market, and of similar size to Centum Electronics Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Centum Electronics has changed over time.
Is Centum Electronics Limited Growing?
Centum Electronics Limited has reduced its earnings per share by an average of 2.1% a year, over the last three years (measured with a line of best fit). Its revenue is up 13% over last year.
In the last three years the company has failed to grow earnings per share. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Centum Electronics Limited Been A Good Investment?
With a three year total loss of 25%, Centum Electronics Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Centum Electronics Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying Centum Electronics shares with their own money (free access).
Important note: Centum Electronics 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.
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