The Compensation For Sterling Tools Limited's (NSE:STERTOOLS) CEO Looks Deserved And Here's Why

Key Insights

• Sterling Tools to hold its Annual General Meeting on 18th of September
• Total pay for CEO Anil Aggarwal includes ₹20.7m salary
• Total compensation is similar to the industry average
• Sterling Tools' total shareholder return over the past three years was 103% while its EPS grew by 59% over the past three years

The performance at Sterling Tools Limited (NSE:STERTOOLS) has been quite strong recently and CEO Anil Aggarwal has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 18th of September. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Sterling Tools

How Does Total Compensation For Anil Aggarwal Compare With Other Companies In The Industry?

Our data indicates that Sterling Tools Limited has a market capitalization of ₹14b, and total annual CEO compensation was reported as ₹26m for the year to March 2023. We note that's an increase of 21% above last year. In particular, the salary of ₹20.7m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Indian Auto Components industry with market capitalizations ranging from ₹8.3b to ₹33b, the reported median CEO total compensation was ₹26m. So it looks like Sterling Tools compensates Anil Aggarwal in line with the median for the industry. Moreover, Anil Aggarwal also holds ₹2.4b worth of Sterling Tools stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹21m	₹18m	79%
Other	₹5.4m	₹3.5m	21%
Total Compensation	₹26m	₹22m	100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Our data reveals that Sterling Tools allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Sterling Tools Limited's Growth Numbers

Sterling Tools Limited has seen its earnings per share (EPS) increase by 59% a year over the past three years. Its revenue is up 38% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Sterling Tools Limited Been A Good Investment?

We think that the total shareholder return of 103%, over three years, would leave most Sterling Tools Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Sterling Tools that investors should think about before committing capital to this 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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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.