Why We Think SIS Limited's (NSE:SIS) CEO Compensation Is Not Excessive At All

Performance at SIS Limited (NSE:SIS) has been rather uninspiring recently and shareholders may be wondering how CEO Rituraj Sinha plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 25 June 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for SIS

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

At the time of writing, our data shows that SIS Limited has a market capitalization of ₹62b, and reported total annual CEO compensation of ₹9.7m for the year to March 2021. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹4.4m.

In comparison with other companies in the industry with market capitalizations ranging from ₹30b to ₹119b, the reported median CEO total compensation was ₹30m. That is to say, Rituraj Sinha is paid under the industry median. What's more, Rituraj Sinha holds ₹6.7b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹4.4m	₹4.4m	46%
Other	₹5.3m	₹5.2m	54%
Total Compensation	₹9.7m	₹9.6m	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.

SIS Limited's Growth

SIS Limited has seen its earnings per share (EPS) increase by 30% a year over the past three years. It achieved revenue growth of 7.6% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 SIS Limited Been A Good Investment?

With a three year total loss of 26% for the shareholders, SIS Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for SIS that investors should think about before committing capital to this stock.

Switching gears from SIS, 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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