How Should Investors React To Butterfly Gandhimathi Appliances Limited's (NSE:BUTTERFLY) CEO Pay?
V. Lakshminarayanan has been the CEO of Butterfly Gandhimathi Appliances Limited (NSE:BUTTERFLY) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.
Check out our latest analysis for Butterfly Gandhimathi Appliances
How Does V. Lakshminarayanan's Compensation Compare With Similar Sized Companies?
Our data indicates that Butterfly Gandhimathi Appliances Limited is worth ₹2.7b, and total annual CEO compensation is ₹5.9m. (This number is for the twelve months until March 2019). We note that's an increase of 25% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹4.5m. We examined a group of similar sized companies, with market capitalizations of below ₹14b. The median CEO total compensation in that group is ₹1.5m.
It would therefore appear that Butterfly Gandhimathi Appliances Limited pays V. Lakshminarayanan more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 Butterfly Gandhimathi Appliances has changed over time.
Is Butterfly Gandhimathi Appliances Limited Growing?
Over the last three years Butterfly Gandhimathi Appliances Limited has grown its earnings per share (EPS) by an average of 43% per year (using a line of best fit). It achieved revenue growth of 21% over the last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.
Has Butterfly Gandhimathi Appliances Limited Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Butterfly Gandhimathi Appliances Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at Butterfly Gandhimathi Appliances 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.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. This contrasts with the growth in CEO remuneration, in the last year. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Shareholders may want to check for free if Butterfly Gandhimathi Appliances insiders are buying or selling shares.
Important note: Butterfly Gandhimathi Appliances 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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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.
