What Can We Make Of Savita Oil Technologies' (NSE:SOTL) CEO Compensation?

Gautam Mehra became the CEO of Savita Oil Technologies Limited (NSE:SOTL) in 2012, 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 Savita Oil Technologies pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Savita Oil Technologies

How Does Total Compensation For Gautam Mehra Compare With Other Companies In The Industry?

At the time of writing, our data shows that Savita Oil Technologies Limited has a market capitalization of ₹9.3b, and reported total annual CEO compensation of ₹34m for the year to March 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹8.1m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹7.2m. Hence, we can conclude that Gautam Mehra is remunerated higher than the industry median. What's more, Gautam Mehra holds ₹6.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. It's interesting to note that Savita Oil Technologies allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Savita Oil Technologies Limited's Growth

Savita Oil Technologies Limited has reduced its earnings per share by 5.8% a year over the last three years. In the last year, its revenue is down 21%.

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. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Savita Oil Technologies Limited Been A Good Investment?

With a three year total loss of 45% for the shareholders, Savita Oil Technologies Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Gautam 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Savita Oil Technologies that investors should be aware of in a dynamic business environment.

Switching gears from Savita Oil Technologies, 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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