We Think Shareholders Are Less Likely To Approve A Pay Rise For Sundaram Brake Linings Limited's (NSE:SUNDRMBRAK) CEO For Now

As many shareholders of Sundaram Brake Linings Limited (NSE:SUNDRMBRAK) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 11 August 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Sundaram Brake Linings

Comparing Sundaram Brake Linings Limited's CEO Compensation With the industry

Our data indicates that Sundaram Brake Linings Limited has a market capitalization of ₹1.8b, and total annual CEO compensation was reported as ₹9.3m for the year to March 2021. We note that's a decrease of 13% compared to last year. We note that the salary portion, which stands at ₹7.35m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹8.3m. This suggests that Sundaram Brake Linings remunerates its CEO largely in line with the industry average.

Component	2021	2020	Proportion (2021)
Salary	₹7.4m	₹8.4m	79%
Other	₹2.0m	₹2.3m	21%
Total Compensation	₹9.3m	₹11m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Although there is a difference in how total compensation is set, Sundaram Brake Linings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Sundaram Brake Linings Limited's Growth

Sundaram Brake Linings Limited's earnings per share (EPS) grew 17% per year over the last three years. It saw its revenue drop 8.2% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Sundaram Brake Linings Limited Been A Good Investment?

Since shareholders would have lost about 3.2% over three years, some Sundaram Brake Linings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 2 warning signs for Sundaram Brake Linings that investors should be aware of in a dynamic business environment.

Switching gears from Sundaram Brake Linings, 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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