U.S. Markets close in 24 mins

Is Max Financial Services Limited (NSE:MFSL) Overpaying Its CEO?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Mohit Talwar became the CEO of Max Financial Services Limited (NSE:MFSL) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Max Financial Services

How Does Mohit Talwar's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Max Financial Services Limited has a market cap of ₹113b, and is paying total annual CEO compensation of ₹144m. (This figure is for the year to March 2018). While we always look at total compensation first, we note that the salary component is less, at ₹33m. We looked at a group of companies with market capitalizations from ₹70b to ₹223b, and the median CEO total compensation was ₹39m.

As you can see, Mohit Talwar is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Max Financial Services Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Max Financial Services has changed over time.

NSEI:MFSL CEO Compensation, June 24th 2019

Is Max Financial Services Limited Growing?

Over the last three years Max Financial Services Limited has shrunk its earnings per share by an average of 2.5% per year (measured with a line of best fit). In the last year, its revenue is up 19%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Max Financial Services Limited Been A Good Investment?

Given the total loss of 21% over three years, many shareholders in Max Financial Services Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Max Financial Services 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.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Max Financial Services shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.