We Think The Compensation For Somany Ceramics Limited's (NSE:SOMANYCERA) CEO Looks About Right

Under the guidance of CEO Shreekant Somany, Somany Ceramics Limited (NSE:SOMANYCERA) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 15 September 2021. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Somany Ceramics

Comparing Somany Ceramics Limited's CEO Compensation With the industry

According to our data, Somany Ceramics Limited has a market capitalization of ₹29b, and paid its CEO total annual compensation worth ₹15m over the year to March 2021. That's a notable decrease of 55% on last year. Notably, the salary of ₹15m is the entirety of the CEO compensation.

For comparison, other companies in the same industry with market capitalizations ranging between ₹15b and ₹59b had a median total CEO compensation of ₹17m. This suggests that Somany Ceramics remunerates its CEO largely in line with the industry average. Moreover, Shreekant Somany also holds ₹138m worth of Somany Ceramics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹15m	₹30m	100%
Other	-	₹4.6m	-
Total Compensation	₹15m	₹35m	100%

Talking in terms of the industry, salary represented approximately 100% of total compensation out of all the companies we analyzed, while other remuneration made up 0.26645% of the pie. At the company level, Somany Ceramics pays Shreekant Somany 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.

Somany Ceramics Limited's Growth

Somany Ceramics Limited's earnings per share (EPS) grew 5.3% per year over the last three years. Its revenue is up 31% over the last year.

We like the look of the strong year-on-year improvement in revenue. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Somany Ceramics Limited Been A Good Investment?

We think that the total shareholder return of 66%, over three years, would leave most Somany Ceramics Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Somany Ceramics rewards its CEO solely through a salary, ignoring non-salary benefits completely. The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Somany Ceramics that you should be aware of before investing.

Important note: Somany Ceramics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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