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In 2016 Deepak Hota was appointed CEO of BEML Limited (NSE:BEML). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for BEML

How Does Deepak Hota’s Compensation Compare With Similar Sized Companies?

Our data indicates that BEML Limited is worth ₹32b, and total annual CEO compensation is ₹4.5m. (This is based on the year to 2018). We think total compensation is more important but we note that the CEO salary is lower, at ₹2.6m. We examined companies with market caps from ₹14b to ₹57b, and discovered that the median CEO compensation of that group was ₹23m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at BEML has changed over time.

Is BEML Limited Growing?

On average over the last three years, BEML Limited has grown earnings per share (EPS) by 55% each year (using a line of best fit). In the last year, its revenue is up 30%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has BEML Limited Been A Good Investment?

With a three year total loss of 19%, BEML Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

It appears that BEML Limited remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we don’t think, Deepak Hota is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.

This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. Shareholders may want to check for free if BEML insiders are buying or selling shares.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.