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In 2016 Krishna Maheshwari was appointed CEO of UltraTech Cement Limited (NSE:ULTRACEMCO). This analysis aims first to contrast CEO compensation with other large companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Krishna Maheshwari's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that UltraTech Cement Limited has a market cap of ₹1.3t, and is paying total annual CEO compensation of ₹136m. (This number is for the twelve months until March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹94m. We took a group of companies with market capitalizations over ₹557b, and calculated the median CEO total compensation to be ₹86m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
It would therefore appear that UltraTech Cement Limited pays Krishna Maheshwari 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 better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at UltraTech Cement has changed over time.
Is UltraTech Cement Limited Growing?
Over the last three years UltraTech Cement Limited has shrunk its earnings per share by an average of 8.6% per year (measured with a line of best fit). Its revenue is up 19% over last year.
Sadly for shareholders, earnings per share are actually down, 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has UltraTech Cement Limited Been A Good Investment?
I think that the total shareholder return of 47%, over three years, would leave most UltraTech Cement Limited shareholders smiling. 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.
We examined the amount UltraTech Cement Limited pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
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. So you may want to check if insiders are buying UltraTech Cement shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 firstname.lastname@example.org. 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.