Shareholders May Be A Little Conservative With SIS Limited's (NSE:SIS) CEO Compensation For Now

Key Insights

• SIS' Annual General Meeting to take place on 6th of July
• Salary of ₹4.42m is part of CEO Rituraj Sinha's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, SIS' EPS fell by 19% and over the past three years, the total shareholder return was 4.9%

Share price growth at SIS Limited (NSE:SIS) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 6th of July. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for SIS

How Does Total Compensation For Rituraj Sinha Compare With Other Companies In The Industry?

Our data indicates that SIS Limited has a market capitalization of ₹65b, and total annual CEO compensation was reported as ₹13m for the year to March 2024. We note that's an increase of 32% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹4.4m.

For comparison, other companies in the Indian Commercial Services industry with market capitalizations ranging between ₹33b and ₹133b had a median total CEO compensation of ₹13m. This suggests that SIS remunerates its CEO largely in line with the industry average. Moreover, Rituraj Sinha also holds ₹7.0b worth of SIS stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	₹4.4m	₹4.4m	35%
Other	₹8.4m	₹5.3m	65%
Total Compensation	₹13m	₹9.7m	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. In SIS' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at SIS Limited's Growth Numbers

Over the last three years, SIS Limited has shrunk its earnings per share by 19% per year. In the last year, its revenue is up 8.1%.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has SIS Limited Been A Good Investment?

SIS Limited has generated a total shareholder return of 4.9% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for SIS that you should be aware of before investing.

Important note: SIS 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.

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