We Think Sheela Foam Limited's (NSE:SFL) CEO Compensation Looks Fair

It would be hard to discount the role that CEO Rahul Gautam has played in delivering the impressive results at Sheela Foam Limited (NSE:SFL) recently. Coming up to the next AGM on 20 August 2021, shareholders would be keeping this in mind. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for Sheela Foam

How Does Total Compensation For Rahul Gautam Compare With Other Companies In The Industry?

According to our data, Sheela Foam Limited has a market capitalization of ₹114b, and paid its CEO total annual compensation worth ₹40m over the year to March 2021. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹3.1m.

On comparing similar companies from the same industry with market caps ranging from ₹74b to ₹238b, we found that the median CEO total compensation was ₹44m. So it looks like Sheela Foam compensates Rahul Gautam in line with the median for the industry. Moreover, Rahul Gautam also holds ₹14b worth of Sheela Foam stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹3.1m	₹3.1m	8%
Other	₹37m	₹32m	92%
Total Compensation	₹40m	₹36m	100%

On an industry level, around 95% of total compensation represents salary and 5% is other remuneration. Sheela Foam pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Sheela Foam Limited's Growth

Over the past three years, Sheela Foam Limited has seen its earnings per share (EPS) grow by 21% per year. In the last year, its revenue is up 12%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Sheela Foam Limited Been A Good Investment?

We think that the total shareholder return of 41%, over three years, would leave most Sheela Foam Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

Whatever your view on compensation, you might want to check if insiders are buying or selling Sheela Foam shares (free trial).

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. 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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