Does Steel Exchange India's (NSE:STEELXIND) CEO Salary Compare Well With The Performance Of The Company?

Bandi Kumar has been the CEO of Steel Exchange India Limited (NSE:STEELXIND) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Steel Exchange India pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Steel Exchange India

How Does Total Compensation For Bandi Kumar Compare With Other Companies In The Industry?

According to our data, Steel Exchange India Limited has a market capitalization of ₹3.0b, and paid its CEO total annual compensation worth ₹6.7m over the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of ₹6.60m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹4.3m. Accordingly, our analysis reveals that Steel Exchange India Limited pays Bandi Kumar north of the industry median. Moreover, Bandi Kumar also holds ₹26m worth of Steel Exchange India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 99% of total compensation represents salary and 1.2% is other remuneration. Steel Exchange India is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Steel Exchange India Limited's Growth Numbers

Over the past three years, Steel Exchange India Limited has seen its earnings per share (EPS) grow by 92% per year. It saw its revenue drop 33% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Steel Exchange India Limited Been A Good Investment?

With a three year total loss of 51% for the shareholders, Steel Exchange India Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Bandi receives almost all of their compensation through a salary. As previously discussed, Bandi is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Bandi is underpaid, in fact compensation is definitely on the higher side.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Steel Exchange India (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. 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.
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