Why Murudeshwar Ceramics' (NSE:MURUDCERA) CEO Pay Matters

Satish Shetty is the CEO of Murudeshwar Ceramics Ltd. (NSE:MURUDCERA), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Murudeshwar Ceramics.

Check out our latest analysis for Murudeshwar Ceramics

How Does Total Compensation For Satish Shetty Compare With Other Companies In The Industry?

According to our data, Murudeshwar Ceramics Ltd. has a market capitalization of ₹828m, and paid its CEO total annual compensation worth ₹7.2m over the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at ₹6.00m 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 ₹5.6m. So it looks like Murudeshwar Ceramics compensates Satish Shetty in line with the median for the industry. What's more, Satish Shetty holds ₹20m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. In Murudeshwar Ceramics' case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 Murudeshwar Ceramics Ltd.'s Growth Numbers

Over the last three years, Murudeshwar Ceramics Ltd. has shrunk its earnings per share by 65% per year. It saw its revenue drop 37% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Murudeshwar Ceramics Ltd. Been A Good Investment?

Given the total shareholder loss of 59% over three years, many shareholders in Murudeshwar Ceramics Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Murudeshwar Ceramics Ltd. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Murudeshwar Ceramics you should be aware of, and 1 of them is potentially serious.

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.

If you decide to trade Murudeshwar Ceramics, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.