How Should Investors Feel About IndusInd Bank Limited’s (NSE:INDUSINDBK) CEO Pay?
Romesh Sobti has been the CEO of IndusInd Bank Limited (NSE:INDUSINDBK) since 2008. First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for IndusInd Bank
How Does Romesh Sobti’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that IndusInd Bank Limited has a market cap of ₹949b, and is paying total annual CEO compensation of ₹42m. (This number is for the twelve months until 2018). While we always look at total compensation first, we note that the salary component is less, at ₹19m. We took a group of companies with market capitalizations over ₹561b, and calculated the median CEO compensation to be ₹94m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
A first glance this seems like a real positive for shareholders, since Romesh Sobti is paid less than the average compensation paid by other large companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at IndusInd Bank has changed from year to year.
Is IndusInd Bank Limited Growing?
On average over the last three years, IndusInd Bank Limited has grown earnings per share (EPS) by 20% each year. In the last year, its revenue is up 21%.
This demonstrates that the company has been improving recently. A good result. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has IndusInd Bank Limited Been A Good Investment?
Most shareholders would probably be pleased with IndusInd Bank Limited for providing a total return of 69% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
It looks like IndusInd Bank Limited pays its CEO less than the average at large companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Romesh Sobti deserves a raise!
It’s not often we see shareholders do so well, and yet the CEO is paid modestly. But it is even better if company insiders are also buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at IndusInd Bank.
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
