Shareholders Will Probably Be Cautious Of Increasing Liberty Shoes Ltd.'s (NSE:LIBERTSHOE) CEO Compensation At The Moment

The anaemic share price growth at Liberty Shoes Ltd. (NSE:LIBERTSHOE) over the past few years has probably not impressed shareholders and may be due to earnings not growing over that period. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 28 September 2021. 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 the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Liberty Shoes

How Does Total Compensation For Adesh Gupta Compare With Other Companies In The Industry?

Our data indicates that Liberty Shoes Ltd. has a market capitalization of ₹2.9b, and total annual CEO compensation was reported as ₹3.9m for the year to March 2021. Notably, that's a decrease of 19% over the year before. Notably, the salary of ₹3.9m 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 ₹3.3m. So it looks like Liberty Shoes compensates Adesh Gupta in line with the median for the industry. What's more, Adesh Gupta holds ₹131m 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	₹3.9m	₹4.8m	100%
Other	-	-	-
Total Compensation	₹3.9m	₹4.8m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. On a company level, Liberty Shoes prefers to reward its CEO through a salary, opting not to pay Adesh Gupta through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Liberty Shoes Ltd.'s Growth

Liberty Shoes Ltd. saw earnings per share stay pretty flat over the last three years. It saw its revenue drop 5.3% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Liberty Shoes Ltd. Been A Good Investment?

Liberty Shoes Ltd. has not done too badly by shareholders, with a total return of 0.03%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

To Conclude...

Liberty Shoes pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Liberty Shoes (2 don't sit too well with us!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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