How Much is Sarla Performance Fibers' (NSE:SARLAPOLY) CEO Getting Paid?

The CEO of Sarla Performance Fibers Limited (NSE:SARLAPOLY) is Krishnakumar Jhunjhunwala, and this article examines 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 Sarla Performance Fibers

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

Our data indicates that Sarla Performance Fibers Limited has a market capitalization of ₹2.4b, and total annual CEO compensation was reported as ₹14m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary of ₹14m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.8m. Hence, we can conclude that Krishnakumar Jhunjhunwala is remunerated higher than the industry median. What's more, Krishnakumar Jhunjhunwala holds ₹69m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. On a company level, Sarla Performance Fibers prefers to reward its CEO through a salary, opting not to pay Krishnakumar Jhunjhunwala through 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 Sarla Performance Fibers Limited's Growth Numbers

Over the last three years, Sarla Performance Fibers Limited has shrunk its earnings per share by 20% per year. Its revenue is down 27% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Sarla Performance Fibers Limited Been A Good Investment?

With a three year total loss of 52% for the shareholders, Sarla Performance Fibers Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Sarla Performance Fibers pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, Krishnakumar is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Sarla Performance Fibers we think you should know about.

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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