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Why Bengal Energy's (TSE:BNG) CEO Pay Matters

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Simply Wall St
·3 min read
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This article will reflect on the compensation paid to Chayan Chakrabarty who has served as CEO of Bengal Energy Ltd. (TSE:BNG) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Bengal Energy

How Does Total Compensation For Chayan Chakrabarty Compare With Other Companies In The Industry?

Our data indicates that Bengal Energy Ltd. has a market capitalization of CA$3.1m, and total annual CEO compensation was reported as CA$230k for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary of CA$230k is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below CA$256m, we found that the median total CEO compensation was CA$282k. This suggests that Bengal Energy remunerates its CEO largely in line with the industry average. Furthermore, Chayan Chakrabarty directly owns CA$93k worth of shares in the company.

Component

2020

2019

Proportion (2020)

Salary

CA$230k

CA$230k

100%

Other

-

-

-

Total Compensation

CA$230k

CA$230k

100%

On an industry level, roughly 45% of total compensation represents salary and 55% is other remuneration. At the company level, Bengal Energy pays Chayan Chakrabarty solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Bengal Energy Ltd.'s Growth Numbers

Bengal Energy Ltd. has seen its earnings per share (EPS) increase by 30% a year over the past three years. It saw its revenue drop 35% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Bengal Energy Ltd. Been A Good Investment?

Given the total shareholder loss of 74% over three years, many shareholders in Bengal Energy Ltd. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Bengal Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Chayan is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But on the bright side, EPS growth is positive over the same period. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Bengal Energy (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.