Nikhil Nanda was the CEO of Escorts Limited (NSE: ESCORTS) since 2013, and this article examines executive compensation in terms of overall company performance. This analysis will also assess whether Escorts is paying its CEO appropriately, taking into account recent earnings growth and total shareholder return.
Check out our latest analysis for escorts
Comparing the compensation of the CEO of Escorts Limited to the industry
At the time of writing, our data shows Escorts Limited has a market capitalization of £ 176 billion and reported total annual CEO compensation of £ 111 million for the year ended March 2020. This means that the remuneration has not changed significantly compared to the previous year. We think total compensation is more important, but our data shows the CEO’s salary is lower at £ 24m.
Compared to other companies in the industry with market caps between £ 146 billion and £ 467 billion, the reported median total CEO compensation was £ 24 million. This suggests that Nikhil Nanda is being paid more than the median for the industry. Additionally, Nikhil Nanda holds £ 1.7 billion worth of Escort stock directly under her own name, which shows us that they have a significant personal stake in the company.
|salary||£ 24m||£ 22m||21%|
|Other||£ 88m||£ 91m||79%|
|Total compensation||£ 111m||£ 113m||100%|
At sector level, around 92% of total compensation corresponds to salary and 8.2% to other compensation. In the case of escorts, the no-salary compensation makes up a larger portion of the total compensation compared to the broader industry. It’s important to note that a propensity for no-salary compensation suggests that total compensation is tied to company performance.
NSEI: ESCORTS CEO Compensation February 4, 2021
The growth of Escorts Limited
Escorts Limited’s earnings per share (EPS) has increased 24% per year for the past three years. Revenue increased by 2.5% last year.
Overall, this is a positive result for shareholders, which shows that the company has improved over the past few years. It’s good to see slight growth in sales as it suggests the business can grow sustainably. Whenever you step away from the current shape for a second it may be important to check out this free visual representation of what analysts expect for the future.
Was Escorts Limited a Good Investment?
With a total return of 53% of shareholders over three years, Escorts Limited has done well with shareholders. So you may not be affected at all if the CEO gets paid more than normal for companies of the same size.
In summary …
As mentioned earlier, Nikhil is paid more than normal for CEOs of similar size companies in the same industry. However, Escorts has seen strong EPS growth and shareholder returns over the past three years. Given these exceptional results for the company, we would say the CEO’s compensation is fair. The gratifying shareholder returns are the cherry on top. We wouldn’t be wrong to say that shareholders believe that Nikhil’s performance creates value for the company.
While CEO compensation is an important factor, there are other areas that you should also be aware of. We researched and discovered 2 warning signs for escorts that investors should look to the future.
The quality of the business arguably is far more important than the CEO’s compensation. Look at that free List of interesting companies with high return on equity and low debt.
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This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
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