A Quick Analysis On Shriram Pistons & Rings' (NSE:SHRIPISTON) CEO Salary

The CEO of Shriram Pistons & Rings Limited (NSE:SHRIPISTON) is Ashok Taneja, and this article examines 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 Shriram Pistons & Rings

How Does Total Compensation For Ashok Taneja Compare With Other Companies In The Industry?

According to our data, Shriram Pistons & Rings Limited has a market capitalization of ₹15b, and paid its CEO total annual compensation worth ₹31m over the year to March 2020. Notably, that's a decrease of 28% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹6.0m.

On comparing similar companies from the same industry with market caps ranging from ₹7.3b to ₹29b, we found that the median CEO total compensation was ₹22m. Accordingly, our analysis reveals that Shriram Pistons & Rings Limited pays Ashok Taneja north of the industry median.

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Shriram Pistons & Rings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Shriram Pistons & Rings Limited's Growth

Shriram Pistons & Rings Limited has reduced its earnings per share by 30% a year over the last three years. It saw its revenue drop 22% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Shriram Pistons & Rings Limited Been A Good Investment?

Since shareholders would have lost about 61% over three years, some Shriram Pistons & Rings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Shriram Pistons & Rings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Shriram Pistons & Rings you should be aware of, and 1 of them is significant.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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