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In 2013 Nikhil Nanda was appointed CEO of Escorts Limited (NSE:ESCORTS). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Escorts
How Does Nikhil Nanda's Compensation Compare With Similar Sized Companies?
According to our data, Escorts Limited has a market capitalization of ₹74b, and pays its CEO total annual compensation worth ₹102m. (This is based on the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹20m. We examined companies with market caps from ₹28b to ₹112b, and discovered that the median CEO total compensation of that group was ₹25m.
Thus we can conclude that Nikhil Nanda receives more in total compensation than the median of a group of companies in the same market, and of similar size to Escorts Limited. However, this doesn't necessarily mean the pay 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 Escorts has changed over time.
Is Escorts Limited Growing?
On average over the last three years, Escorts Limited has grown earnings per share (EPS) by 48% each year (using a line of best fit). It achieved revenue growth of 24% over the last year.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Escorts Limited Been A Good Investment?
Most shareholders would probably be pleased with Escorts Limited for providing a total return of 257% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
We examined the amount Escorts Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Escorts (free visualization of insider trades).