Here's What We Think About Suprajit Engineering's (NSE:SUPRAJIT) CEO Pay

Mohan Nagamangala became the CEO of Suprajit Engineering Limited (NSE:SUPRAJIT) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Suprajit Engineering

Comparing Suprajit Engineering Limited's CEO Compensation With the industry

At the time of writing, our data shows that Suprajit Engineering Limited has a market capitalization of ₹25b, and reported total annual CEO compensation of ₹19m for the year to March 2020. That's a fairly small increase of 6.1% over the previous year. In particular, the salary of ₹13.5m, 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 ranging from ₹15b to ₹59b, the reported median CEO total compensation was ₹34m. Accordingly, Suprajit Engineering pays its CEO under the industry median. Furthermore, Mohan Nagamangala directly owns ₹1.5m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Suprajit Engineering is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Suprajit Engineering Limited's Growth

Over the last three years, Suprajit Engineering Limited has shrunk its earnings per share by 19% per year. It saw its revenue drop 13% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Suprajit Engineering Limited Been A Good Investment?

Given the total shareholder loss of 33% over three years, many shareholders in Suprajit Engineering Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Mohan is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Mohan is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Suprajit Engineering that investors should look into moving forward.

Important note: Suprajit Engineering 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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