Automobiles News

Here’s Why It’s Unlikely That Federal-Mogul Goetze (India) Limited’s (NSE:FMGOETZE) CEO Will See A Pay Rise This Year


Federal-Mogul Goetze (India) Limited (NSE:FMGOETZE) has not performed well recently and CEO Vinod Hans will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 20 September 2022. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Federal-Mogul Goetze (India)

How Does Total Compensation For Vinod Hans Compare With Other Companies In The Industry?

At the time of writing, our data shows that Federal-Mogul Goetze (India) Limited has a market capitalization of ₹17b, and reported total annual CEO compensation of ₹21m for the year to March 2016. Notably, that’s an increase of 61% over the year before. Notably, the salary which is ₹15.8m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from ₹7.9b to ₹32b, we found that the median CEO total compensation was ₹22m. This suggests that Federal-Mogul Goetze (India) remunerates its CEO largely in line with the industry average.

Component 2016 2017 Proportion (2016)
Salary ₹16m ₹9.5m 74%
Other ₹5.5m ₹3.7m 26%
Total Compensation ₹21m ₹13m 100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. There isn’t a significant difference between Federal-Mogul Goetze (India) and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NSEI:FMGOETZE CEO Compensation September 14th 2022

Federal-Mogul Goetze (India) Limited’s Growth

Over the last three years, Federal-Mogul Goetze (India) Limited has shrunk its earnings per share by 4.7% per year. Its revenue is up 7.4% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn’t much comfort against the reduced EPS. 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 you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Federal-Mogul Goetze (India) Limited Been A Good Investment?

Few Federal-Mogul Goetze (India) Limited shareholders would feel satisfied with the return of -46% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude…

Not only have shareholders not seen a favorable return on their investment, but the business hasn’t performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management’s plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That’s why we did some digging and identified 1 warning sign for Federal-Mogul Goetze (India) that you should be aware of before investing.

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is complex, but we’re helping make it simple.

Find out whether Federal-Mogul Goetze (India) is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis



Source link