Kedar Vaze became the CEO of S H Kelkar and Company Limited (NSE:SHK) in 2014, 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 assess whether S H Kelkar pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for S H Kelkar
How Does Total Compensation For Kedar Vaze Compare With Other Companies In The Industry?
At the time of writing, our data shows that S H Kelkar and Company Limited has a market capitalization of ₹12b, and reported total annual CEO compensation of ₹17m for the year to March 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of ₹12.9m, 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 ₹7.5b to ₹30b, the reported median CEO total compensation was ₹20m. From this we gather that Kedar Vaze is paid around the median for CEOs in the industry. Moreover, Kedar Vaze also holds ₹1.7b worth of S H Kelkar stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | ₹13m | ₹13m | 75% |
| Other | ₹4.3m | ₹4.2m | 25% |
| Total Compensation | ₹17m | ₹17m | 100% |
On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. It's interesting to note that S H Kelkar allocates a smaller portion of compensation to salary in comparison to the broader industry. 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.
A Look at S H Kelkar and Company Limited's Growth Numbers
Over the last three years, S H Kelkar and Company Limited has shrunk its earnings per share by 31% per year. Its revenue is down 4.9% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has S H Kelkar and Company Limited Been A Good Investment?
With a three year total loss of 68% for the shareholders, S H Kelkar and Company 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 we noted earlier, S H Kelkar pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for S H Kelkar that investors should look into moving forward.
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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About NSEI:SHK
S H Kelkar
Manufactures and supplies fragrances, flavors, and aroma ingredients in India.
Undervalued moderate.
