How Much is Shree Rama Multi-Tech's (NSE:SHREERAMA) CEO Getting Paid?

Shailesh Desai became the CEO of Shree Rama Multi-Tech Limited (NSE:SHREERAMA) in 2015, 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.

See our latest analysis for Shree Rama Multi-Tech

Comparing Shree Rama Multi-Tech Limited's CEO Compensation With the industry

Our data indicates that Shree Rama Multi-Tech Limited has a market capitalization of ₹516m, and total annual CEO compensation was reported as ₹7.0m for the year to March 2020. That's just a smallish increase of 5.4% on last year. In particular, the salary of ₹6.76m, 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 ₹3.2m. Accordingly, our analysis reveals that Shree Rama Multi-Tech Limited pays Shailesh Desai north of the industry median.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Shree Rama Multi-Tech 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 Shree Rama Multi-Tech Limited's Growth Numbers

Over the past three years, Shree Rama Multi-Tech Limited has seen its earnings per share (EPS) grow by 119% per year. Its revenue is down 5.6% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Shree Rama Multi-Tech Limited Been A Good Investment?

Since shareholders would have lost about 35% over three years, some Shree Rama Multi-Tech Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shree Rama Multi-Tech pays its CEO a majority of compensation through a salary. As previously discussed, Shailesh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Shailesh is earning a very handsome sum.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Shree Rama Multi-Tech (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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