A Quick Analysis On Renaissance Global's (NSE:RGL) CEO Compensation

Hitesh Shah has been the CEO of Renaissance Global Limited (NSE:RGL) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Renaissance Global.

Check out our latest analysis for Renaissance Global

Comparing Renaissance Global Limited's CEO Compensation With the industry

According to our data, Renaissance Global Limited has a market capitalization of ₹5.8b, and paid its CEO total annual compensation worth ₹9.1m over the year to March 2020. Notably, that's an increase of 67% over the year before. Notably, the salary which is ₹9.00m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.6m. This suggests that Hitesh Shah is paid more than the median for the industry. What's more, Hitesh Shah holds ₹410m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Renaissance Global has gone down a largely traditional route, paying Hitesh Shah a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Renaissance Global Limited's Growth Numbers

Renaissance Global Limited has reduced its earnings per share by 12% a year over the last three years. Its revenue is down 31% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Renaissance Global Limited Been A Good Investment?

Given the total shareholder loss of 12% over three years, many shareholders in Renaissance Global Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Renaissance Global pays its CEO a majority of compensation through a salary. As we touched on above, Renaissance Global Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 3 warning signs for Renaissance Global (1 is a bit concerning!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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