Why RSWM's (NSE:RSWM) CEO Pay Matters

The CEO of RSWM Limited (NSE:RSWM) is Riju Jhunjhunwala, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether RSWM pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for RSWM

How Does Total Compensation For Riju Jhunjhunwala Compare With Other Companies In The Industry?

At the time of writing, our data shows that RSWM Limited has a market capitalization of ₹4.0b, and reported total annual CEO compensation of ₹21m for the year to March 2020. We note that's a decrease of 35% compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹21m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹3.6m. Accordingly, our analysis reveals that RSWM Limited pays Riju Jhunjhunwala north of the industry median. Moreover, Riju Jhunjhunwala also holds ₹30m worth of RSWM stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. Speaking on a company level, RSWM prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at RSWM Limited's Growth Numbers

Over the last three years, RSWM Limited has shrunk its earnings per share by 54% per year. In the last year, its revenue is down 29%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has RSWM Limited Been A Good Investment?

With a three year total loss of 50% for the shareholders, RSWM Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

RSWM pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Riju is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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 RSWM (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Switching gears from RSWM, 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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