Decent performance at Cochin Shipyard Limited (NSE: COCHINSHIP) will be popular with most shareholders recently as they head to the AGM on September 29, 2021. They will likely be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive compensation. In our analysis below, we explain why we think CEO compensation looks acceptable and warrants an increase.
Check out our latest review for Cochin Shipyard
How does Madhu Nair’s total compensation compare to other companies in the industry?
Our data indicates that Cochin Shipyard Limited has a market capitalization of 48 billion yen and that the CEO’s total annual compensation was 7.1 million yen for the year up to March 2021. This is a notable decrease of 8.6% compared to last year. Note that the salary portion, which amounts to 4.71 M, constitutes the majority of the total compensation received by the CEO.
Looking at similar-sized companies in the industry with market capitalizations between 30 and 118 billion yen, we found that the median total compensation of CEOs in this group was 44 million yen. This suggests that Madhu Nair is being paid below the industry median. In addition, Madhu Nair also owns shares of Cochin Shipyard valued at 218,000 yen directly under their own name, which tells us that they have a significant personal stake in the company.
|Making up||2021||2020||Proportion (2021)|
|Total compensation||7.1m||â¹ 7.8m||100%|
At the industry level, about 92% of total compensation is salary and 8% is other compensation. Interestingly, Cochin Shipyard allocates a smaller portion of pay to salary compared to the industry as a whole. If salary is the primary component of total compensation, this suggests that the CEO receives a higher fixed proportion of total compensation, regardless of performance.
A look at the growth figures of Cochin Shipyard Limited
Cochin Shipyard Limited’s earnings per share (EPS) have grown by 14% per year over the past three years. Its turnover is down 6.7% compared to the previous year.
Shareholders would be happy to know that the company has improved over the past few years. Lack of revenue growth isn’t ideal, but it’s the bottom line that matters most in business. While we don’t have an analyst forecast for the company, shareholders might want to take a look at this detailed historical chart of earnings, income and cash flow.
Has Cochin Shipyard Limited been a good investment?
Cochin Shipyard Limited generated a total shareholder return of 3.0% over three years, so most shareholders wouldn’t be too disappointed. Although there is always room to improve. In light of this, investors will likely want to see an improvement in their returns before they feel generous about increasing CEO compensation.
Although the company appears to be heading in the right direction in terms of performance, there is always room for improvement. If he manages to maintain the current streak, CEO compensation may well be one of the least concerns for shareholders. Instead, investors might be more interested in discussions that would help manage their long-term growth expectations, such as the company’s business strategies and potential for future growth.
CEO compensation can have a huge impact on performance, but it’s only one element. We have identified 1 warning sign for the Cochin shipyard which investors should be aware of in a dynamic business environment.
Important note: Cochin Shipyard is exciting stock, but we understand that investors can look for an unencumbered balance sheet and successful returns. You might find something better in this list of interesting companies with high ROE and low leverage.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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