...Continuing with Management Analysis
One important thing to check is the *remuneration (R) of the MD/CEO*:
1) Usually, the remuneration (including basic pay & incentives; excluding dividends) is between 2%-4% of Net Profits.
- If R < 2%, it is a good sign.
- If R > 4%, it might be a red flag.
2) If the *growth in remuneration* over the years is more than the growth in net profits, it is a red flag again.
A shareholder friendly management will always keep a check on the above parameters.
Annual Reports are an ocean of information