We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Sterling Tools Limited's (NSE:STERTOOLS) CEO For Now

CEO Anil Aggarwal has done a decent job of delivering relatively good performance at Sterling Tools Limited (NSE:STERTOOLS) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 22 September 2022. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Sterling Tools

Comparing Sterling Tools Limited's CEO Compensation With The Industry

According to our data, Sterling Tools Limited has a market capitalization of ₹8.3b, and paid its CEO total annual compensation worth ₹22m over the year to March 2022. Notably, that's an increase of 40% over the year before. Notably, the salary which is ₹18.1m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹11m. Hence, we can conclude that Anil Aggarwal is remunerated higher than the industry median. Furthermore, Anil Aggarwal directly owns ₹1.4b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	₹18m	₹11m	84%
Other	₹3.5m	₹4.2m	16%
Total Compensation	₹22m	₹15m	100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Our data reveals that Sterling Tools allocates salary more or less in line with the wider market. 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.

A Look at Sterling Tools Limited's Growth Numbers

Sterling Tools Limited has reduced its earnings per share by 6.9% a year over the last three years. In the last year, its revenue is up 41%.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sterling Tools Limited Been A Good Investment?

We think that the total shareholder return of 48%, 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.

To Conclude...

Some shareholders will be pleased by the relatively good results, however, the results could still be improved. EPS growth is still weak, and until that picks up, shareholders may find it hard to approve a pay rise for the CEO, since they are already paid above the average in their industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Sterling Tools (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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. 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.