We are quite impressed with the performance in Torrent power limited (NSE: TORNTPOWER) recently and CEO Jinal Mehta deserves a mention for his role in it. Satisfactory results would be something that shareholders would consider at the next General Shareholders' Meeting on August 6, 2021. The focus will likely be on the future strategy of the company, as shareholders cast their votes on resolutions such as the remuneration of executives and other matters. This is our take on why we think the CEO's compensation isn't outrageous.
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Torrent Power Limited CEO Compensation Comparison to Industry
According to our data, Torrent Power Limited has a market capitalization of โน 217b and paid its CEO a total annual compensation of โน 130m during the year to March 2021. Notably, that's a 16% increase over the previous year . We note that the portion of the salary, which amounts to Rs 105.0 million, constitutes the majority of the total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging from โน 149b to โน 475b had a median total CEO compensation of โน 130 million. From this we deduce that Jinal Mehta is paid around the median of CEOs in the industry.
| Component | 2021 | 2020 | Proportion (2021) |
| Salary | โน 105 million | 87 million rupees | 81% |
| Other | 25 million rupees | 25 million rupees | 19% |
| Total compensation | 130 million rupees | โน 112 million | 100% |
Speaking in industry terms, salary accounted for roughly 65% โโof total compensation for all the companies we analyzed, while other compensation accounted for 35% of the pie. According to our research, Torrent Power has assigned a higher percentage of pay to salary compared to the industry in general. If total compensation leans toward salary, it suggests that the variable portion, which is generally tied to performance, is less.
Growth of Torrent Power Limited
Torrent Power Limited has seen its earnings per share (EPS) increase by 11% annually for the past three years. Their income is down 11% from the previous year.
This shows that the company has been improving recently and is good news for shareholders. Lack of revenue growth isn't ideal, but it's the bottom line that counts most in business. Looking ahead, you may want to check this free visual report on analyst forecasts for the future profits of the company..
Has Torrent Power Limited been a good investment?
With a total return to shareholders of 112% over three years, Torrent Power Limited has performed well with shareholders. Therefore, they may not care at all if the CEO was paid more than normal for companies of the same size.
In conclusion...
Given the company's decent performance, the CEO's compensation policy may not be the central point of focus for shareholders at AGM. In fact, strategic decisions that could affect the future of the business could be a much more interesting topic for investors, as it would help them set their long-term expectations.
CEO compensation is a crucial aspect to consider, but investors need to be on the lookout for other business performance issues as well. That is why we investigate and identify 2 Warning Signs for Torrent Power investors should think about before committing capital to this stock.
Shifting gears from Torrent Power, if you're looking for flawless balance and premium performance, this free The list of high-yield, low-debt companies is a great place to look.
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