Stock Analysis
Himanshu Gupta has been the CEO of S Chand and Company Limited (NSE:SCHAND) since 2016, and this article will examine the executive's compensation 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.
Check out our latest analysis for S Chand
Comparing S Chand and Company Limited's CEO Compensation With the industry
At the time of writing, our data shows that S Chand and Company Limited has a market capitalization of ₹2.2b, and reported total annual CEO compensation of ₹15m for the year to March 2020. That's a notable increase of 13% on last year. Notably, the salary which is ₹12.3m, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹13m. This suggests that S Chand remunerates its CEO largely in line with the industry average. Moreover, Himanshu Gupta also holds ₹381m worth of S Chand 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 | ₹12m | ₹11m | 85% |
| Other | ₹2.2m | ₹1.7m | 15% |
| Total Compensation | ₹15m | ₹13m | 100% |
Talking in terms of the industry, salary represented approximately 99% of total compensation out of all the companies we analyzed, while other remuneration made up 1.3% of the pie. It's interesting to note that S Chand 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.
S Chand and Company Limited's Growth
Over the last three years, S Chand and Company Limited has shrunk its earnings per share by 99% per year. In the last year, its revenue is down 16%.
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. 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 S Chand and Company Limited Been A Good Investment?
Given the total shareholder loss of 86% over three years, many shareholders in S Chand and Company Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we noted earlier, S Chand 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. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for S Chand (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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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About NSEI:SCHAND
S Chand
An education content company, develops and delivers content, solutions, and services for the early learning, K-12, and higher education segments in India.
Flawless balance sheet, good value and pays a dividend.
