Here's What We Think About Avadh Sugar & Energy's (NSE:AVADHSUGAR) CEO Pay

Devendra Sharma is the CEO of Avadh Sugar & Energy Limited (NSE:AVADHSUGAR), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Avadh Sugar & Energy

Comparing Avadh Sugar & Energy Limited's CEO Compensation With the industry

According to our data, Avadh Sugar & Energy Limited has a market capitalization of ₹3.6b, and paid its CEO total annual compensation worth ₹9.6m over the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at ₹8.82m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.5m. This suggests that Devendra Sharma is paid more than the median for the industry.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Our data reveals that Avadh Sugar & Energy allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Avadh Sugar & Energy Limited's Growth

Avadh Sugar & Energy Limited has reduced its earnings per share by 29% a year over the last three years. In the last year, its revenue is up 31%.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Avadh Sugar & Energy Limited Been A Good Investment?

With a three year total loss of 64% for the shareholders, Avadh Sugar & Energy Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Devendra is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. On a more positive note, the company has produced a more positive revenue growth more recently. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 2 which are significant) in Avadh Sugar & Energy we think you should know about.

Important note: Avadh Sugar & Energy is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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