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How Should Investors React To Wipro Limited’s (NSE:WIPRO) CEO Pay?

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Abid Neemuchwala became the CEO of Wipro Limited (NSE:WIPRO) in 2016. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Wipro

How Does Abid Neemuchwala’s Compensation Compare With Similar Sized Companies?

Our data indicates that Wipro Limited is worth ₹1.7t, and total annual CEO compensation is ₹182m. (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 ₹63m. When we examined a group of companies with market caps over ₹571b, we found that their median CEO compensation was ₹91m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

It would therefore appear that Wipro Limited pays Abid Neemuchwala more than the median CEO remuneration at large companies, 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 Wipro has changed over time.

NSEI:WIPRO CEO Compensation, February 19th 2019
NSEI:WIPRO CEO Compensation, February 19th 2019

Is Wipro Limited Growing?

On average over the last three years, Wipro Limited has shrunk earnings per share by 1.0% each year (measured with a line of best fit). Its revenue is up 4.8% over last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Wipro Limited Been A Good Investment?

Most shareholders would probably be pleased with Wipro Limited for providing a total return of 36% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Wipro Limited, and compared it to remuneration at a group of other large 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.

However, we can’t argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Wipro shares (free trial).

If you want to buy a stock that is better than Wipro, this free list of high return, low debt companies is a great place to look.

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.

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