How Is HMT's (NSE:HMT) CEO Paid Relative To Peers?

This article will reflect on the compensation paid to Sadasivan Kumar who has served as CEO of HMT Limited (NSE:HMT) since 2013. 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 HMT

How Does Total Compensation For Sadasivan Kumar Compare With Other Companies In The Industry?

According to our data, HMT Limited has a market capitalization of ₹31b, and paid its CEO total annual compensation worth ₹4.5m over the year to March 2020. We note that's an increase of 58% above last year. Notably, the salary of ₹4.5m is the entirety of the CEO compensation.

On examining similar-sized companies in the industry with market capitalizations between ₹15b and ₹58b, we discovered that the median CEO total compensation of that group was ₹19m. In other words, HMT pays its CEO lower than the industry median.

On an industry level, around 93% of total compensation represents salary and 7.3% is other remuneration. Speaking on a company level, HMT prefers to tread along a traditional path, disbursing all compensation through a salary. 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 HMT Limited's Growth Numbers

Over the last three years, HMT Limited has shrunk its earnings per share by 7.3% per year. Its revenue is down 38% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 HMT Limited Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in HMT Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

HMT rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Sadasivan is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 3 which are significant) in HMT we think you should know about.

Switching gears from HMT, 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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