Is Lakshmi Finance & Industrial Corporation Limited's (NSE:LFIC) CEO Overpaid Relative To Its Peers?

Simply Wall St

The CEO of Lakshmi Finance & Industrial Corporation Limited (NSE:LFIC) is Kanuri Prasad. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Lakshmi Finance & Industrial

How Does Kanuri Prasad's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Lakshmi Finance & Industrial Corporation Limited has a market cap of ₹159m, and reported total annual CEO compensation of ₹7.7m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at ₹6.0m. We looked at a group of companies with market capitalizations under ₹14b, and the median CEO total compensation was ₹1.8m.

It would therefore appear that Lakshmi Finance & Industrial Corporation Limited pays Kanuri Prasad 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. 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 a visual representation of the CEO compensation at Lakshmi Finance & Industrial, below.

NSEI:LFIC CEO Compensation, October 10th 2019

Is Lakshmi Finance & Industrial Corporation Limited Growing?

Over the last three years Lakshmi Finance & Industrial Corporation 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 down 30% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Lakshmi Finance & Industrial Corporation Limited Been A Good Investment?

Lakshmi Finance & Industrial Corporation Limited has generated a total shareholder return of 23% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Lakshmi Finance & Industrial Corporation Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the CEO pay is too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Lakshmi Finance & Industrial.

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 editorial-team@simplywallst.com. 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.