In 2011 V. Lakshminarayanan was appointed CEO of Butterfly Gandhimathi Appliances Limited (NSE:BUTTERFLY).
This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization.
Then we’ll look at a snap shot of the business growth.
And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years.
This process should give us an idea about how appropriately the CEO is paid.
How Does V. Lakshminarayanan’s Compensation Compare With Similar Sized Companies?
Our data indicates that Butterfly Gandhimathi Appliances Limited is worth ₹3.4b, and total annual CEO compensation is ₹4.8m.
(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 ₹3.6m.
We took a group of companies with market capitalizations below ₹14b, and calculated the median CEO total compensation to be ₹1.2m.
It would therefore appear that Butterfly Gandhimathi Appliances Limited pays V. Lakshminarayanan more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration 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 Butterfly Gandhimathi Appliances has changed over time.
Is Butterfly Gandhimathi Appliances Limited Growing?
Over the last three years Butterfly Gandhimathi Appliances Limited has grown its earnings per share (EPS) by an average of 12% per year (using a line of best fit).
It achieved revenue growth of 20% over the last year.
This demonstrates that the company has been improving recently. A good result.
It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
Shareholders might be interested in this free visualization of analyst forecasts.
Has Butterfly Gandhimathi Appliances Limited Been A Good Investment?
With a total shareholder return of 4.4% over three years, Butterfly Gandhimathi Appliances Limited has done okay by shareholders.
But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared total CEO remuneration at Butterfly Gandhimathi Appliances Limited with the amount paid at companies with a similar market capitalization.
Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years.
We also think investors are doing ok, over the same time period.
So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management.
Whatever your view on compensation, you might want to check if insiders are buying or selling Butterfly Gandhimathi Appliances shares (free trial).
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 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.
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