We Think Shareholders May Want To Consider A Review Of CMI Limited's (NSE:CMICABLES) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at CMI Limited (NSE:CMICABLES) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30 September 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for CMI

How Does Total Compensation For Amit Jain Compare With Other Companies In The Industry?

According to our data, CMI Limited has a market capitalization of ₹720m, and paid its CEO total annual compensation worth ₹5.5m over the year to March 2021. We note that's a decrease of 53% compared to last year. Notably, the salary which is ₹2.89m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹5.5m. So it looks like CMI compensates Amit Jain in line with the median for the industry. What's more, Amit Jain holds ₹128m 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	₹2.9m	₹6.5m	52%
Other	₹2.6m	₹5.3m	48%
Total Compensation	₹5.5m	₹12m	100%

Speaking on an industry level, nearly 97% of total compensation represents salary, while the remainder of 3% is other remuneration. CMI pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at CMI Limited's Growth Numbers

Over the last three years, CMI Limited has shrunk its earnings per share by 123% per year. In the last year, its revenue is down 46%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 CMI Limited Been A Good Investment?

The return of -70% over three years would not have pleased CMI Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 5 warning signs for CMI (of which 3 are significant!) that you should know about in order to have a holistic understanding of the stock.

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.
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