How Should Investors React To Poddar Pigments' (NSE:PODDARMENT) CEO Pay?

October 21, 2020

Ramesh Sureka became the CEO of Poddar Pigments Limited (NSE:PODDARMENT) in 1999, 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.

View our latest analysis for Poddar Pigments

How Does Total Compensation For Ramesh Sureka Compare With Other Companies In The Industry?

According to our data, Poddar Pigments Limited has a market capitalization of ₹1.9b, and paid its CEO total annual compensation worth ₹18m over the year to March 2020. We note that's an increase of 36% above last year. Notably, the salary which is ₹12.5m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹7.0m. Hence, we can conclude that Ramesh Sureka is remunerated higher than the industry median.

Component	2020	2019	Proportion (2020)
Salary	₹13m	₹11m	70%
Other	₹5.4m	₹2.4m	30%
Total Compensation	₹18m	₹13m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. It's interesting to note that Poddar Pigments allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation — NSEI:PODDARMENT CEO Compensation October 22nd 2020

Poddar Pigments Limited's Growth

Poddar Pigments Limited has reduced its earnings per share by 3.9% a year over the last three years. Its revenue is down 20% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Poddar Pigments Limited Been A Good Investment?

Given the total shareholder loss of 42% over three years, many shareholders in Poddar Pigments 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, Ramesh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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. That's why we did some digging and identified 1 warning sign for Poddar Pigments that you should be aware of before investing.

Switching gears from Poddar Pigments, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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About NSEI:PODDARMENT

Poddar Pigments

Manufactures and sells color and additive masterbatches for dope dyeing of man-made fibers and various plastic applications in India and internationally.

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