We Think Shareholders May Consider Being More Generous With Motherson Sumi Systems Limited's (NSE:MOTHERSUMI) CEO Compensation Package

Shareholders will probably not be disappointed by the robust results at Motherson Sumi Systems Limited (NSE:MOTHERSUMI) recently and they will be keeping this in mind as they go into the AGM on 17 September 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for Motherson Sumi Systems

Comparing Motherson Sumi Systems Limited's CEO Compensation With the industry

At the time of writing, our data shows that Motherson Sumi Systems Limited has a market capitalization of ₹672b, and reported total annual CEO compensation of ₹29m for the year to March 2021. That's a fairly small increase of 3.6% over the previous year. We note that the salary portion, which stands at ₹20.2m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from ₹294b to ₹883b, we found that the median CEO total compensation was ₹152m. This suggests that Pankaj Mital is paid below the industry median. What's more, Pankaj Mital holds ₹21m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹20m	₹19m	69%
Other	₹9.1m	₹8.8m	31%
Total Compensation	₹29m	₹28m	100%

Talking in terms of the industry, salary represented approximately 73% of total compensation out of all the companies we analyzed, while other remuneration made up 27% of the pie. There isn't a significant difference between Motherson Sumi Systems and the broader market, in terms of salary allocation in the overall compensation package. 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.

Motherson Sumi Systems Limited's Growth

Motherson Sumi Systems Limited has reduced its earnings per share by 1.9% a year over the last three years. Its revenue is up 18% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Motherson Sumi Systems Limited Been A Good Investment?

Motherson Sumi Systems Limited has served shareholders reasonably well, with a total return of 15% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Motherson Sumi Systems 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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