How Is Ruby Mills' (NSE:RUBYMILLS) CEO Paid Relative To Peers?

Purav Shah became the CEO of The Ruby Mills Limited (NSE:RUBYMILLS) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Ruby Mills

Comparing The Ruby Mills Limited's CEO Compensation With the industry

According to our data, The Ruby Mills Limited has a market capitalization of ₹3.2b, and paid its CEO total annual compensation worth ₹7.2m over the year to March 2020. That's a fairly small increase of 4.5% over the previous year. We note that the salary portion, which stands at ₹6.22m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹4.1m. Accordingly, our analysis reveals that The Ruby Mills Limited pays Purav Shah north of the industry median. Moreover, Purav Shah also holds ₹75m worth of Ruby Mills stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In Ruby Mills' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

The Ruby Mills Limited's Growth

The Ruby Mills Limited has reduced its earnings per share by 25% a year over the last three years. In the last year, its revenue is down 37%.

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 The Ruby Mills Limited Been A Good Investment?

Given the total shareholder loss of 36% over three years, many shareholders in The Ruby Mills Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, The Ruby Mills 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. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Ruby Mills (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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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