Should Shareholders Reconsider Shriram EPC Limited's (NSE:SHRIRAMEPC) CEO Compensation Package?

Shriram EPC Limited (NSE:SHRIRAMEPC) has not performed well recently and CEO Thyagarajan Shivaraman will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28 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.

View our latest analysis for Shriram EPC

How Does Total Compensation For Thyagarajan Shivaraman Compare With Other Companies In The Industry?

According to our data, Shriram EPC Limited has a market capitalization of ₹5.0b, and paid its CEO total annual compensation worth ₹6.0m over the year to March 2021. That's mostly flat as compared to the prior year's compensation. Notably, the salary of ₹6.0m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.2m. Accordingly, our analysis reveals that Shriram EPC Limited pays Thyagarajan Shivaraman north of the industry median. Furthermore, Thyagarajan Shivaraman directly owns ₹1.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹6.0m	₹6.2m	100%
Other	-	-	-
Total Compensation	₹6.0m	₹6.2m	100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. At the company level, Shriram EPC pays Thyagarajan Shivaraman solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Shriram EPC Limited's Growth Numbers

Shriram EPC Limited has reduced its earnings per share by 105% a year over the last three years. It saw its revenue drop 45% over the last year.

The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shriram EPC Limited Been A Good Investment?

Few Shriram EPC Limited shareholders would feel satisfied with the return of -54% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shriram EPC pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Shriram EPC you should be aware of, and 1 of them makes us a bit uncomfortable.

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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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