Is India Motor Parts and Accessories Limited’s (NSE:IMPAL) CEO Paid Enough Relative To Peers?

  • Eric
  • July 31, 2019
  • Comments Off on Is India Motor Parts and Accessories Limited’s (NSE:IMPAL) CEO Paid Enough Relative To Peers?

N. Krishnan became the CEO of India Motor Parts and Accessories Limited (NSE:IMPAL) in 1999. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for India Motor Parts and Accessories

How Does N. Krishnan’s Compensation Compare With Similar Sized Companies?

According to our data, India Motor Parts and Accessories Limited has a market capitalization of ₹6.9b, and pays its CEO total annual compensation worth ₹16m. (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 ₹7.8m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.4m.

Thus we can conclude that N. Krishnan receives more in total compensation than the median of a group of companies in the same market, and of similar size to India Motor Parts and Accessories Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at India Motor Parts and Accessories has changed over time.

NSEI:IMPAL CEO Compensation, July 31st 2019
NSEI:IMPAL CEO Compensation, July 31st 2019

Is India Motor Parts and Accessories Limited Growing?

On average over the last three years, India Motor Parts and Accessories Limited has grown earnings per share (EPS) by 13% each year (using a line of best fit). It achieved revenue growth of 9.4% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has India Motor Parts and Accessories Limited Been A Good Investment?

India Motor Parts and Accessories Limited has not done too badly by shareholders, with a total return of 1.3%, over three years. 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.

In Summary…

We examined the amount India Motor Parts and Accessories Limited pays its CEO, and compared it to the amount paid by similar sized companies. 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. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. So you may want to check if insiders are buying India Motor Parts and Accessories shares with their own money (free access).

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.

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