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Performance at Genpact Limited (NYSE:G) has been reasonably good and CEO Tiger Tyagarajan has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 05 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.
How Does Total Compensation For Tiger Tyagarajan Compare With Other Companies In The Industry?
According to our data, Genpact Limited has a market capitalization of US$8.9b, and paid its CEO total annual compensation worth US$5.3m over the year to December 2020. We note that's a decrease of 30% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$750k.
For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.2m. From this we gather that Tiger Tyagarajan is paid around the median for CEOs in the industry. What's more, Tiger Tyagarajan holds US$30m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Although there is a difference in how total compensation is set, Genpact more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Genpact Limited's Growth Numbers
Genpact Limited has seen its earnings per share (EPS) increase by 6.1% a year over the past three years. It achieved revenue growth of 5.3% over the last year.
We'd prefer higher revenue growth, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Genpact Limited Been A Good Investment?
Boasting a total shareholder return of 55% over three years, Genpact Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Genpact that investors should look into moving forward.
Switching gears from Genpact, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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