Should Shareholders Reconsider Siyaram Silk Mills Limited's (NSE:SIYSIL) CEO Compensation Package?

By
Simply Wall St
Published
July 24, 2021
NSEI:SIYSIL
Source: Shutterstock

Siyaram Silk Mills Limited (NSE:SIYSIL) has not performed well recently and CEO Rameshkumar Poddar will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31 July 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Siyaram Silk Mills

How Does Total Compensation For Rameshkumar Poddar Compare With Other Companies In The Industry?

Our data indicates that Siyaram Silk Mills Limited has a market capitalization of ₹19b, and total annual CEO compensation was reported as ₹15m for the year to March 2021. That's a notable decrease of 37% on last year. Notably, the salary of ₹15m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations ranging from ₹7.4b to ₹30b, the reported median CEO total compensation was ₹18m. So it looks like Siyaram Silk Mills compensates Rameshkumar Poddar in line with the median for the industry. Furthermore, Rameshkumar Poddar directly owns ₹1.7b worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary ₹15m ₹24m 100%
Other - - -
Total Compensation₹15m ₹24m100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. At the company level, Siyaram Silk Mills pays Rameshkumar Poddar solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
NSEI:SIYSIL CEO Compensation July 25th 2021

A Look at Siyaram Silk Mills Limited's Growth Numbers

Over the last three years, Siyaram Silk Mills Limited has shrunk its earnings per share by 68% per year. It saw its revenue drop 36% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Siyaram Silk Mills Limited Been A Good Investment?

Given the total shareholder loss of 20% over three years, many shareholders in Siyaram Silk Mills 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...

Siyaram Silk Mills rewards its CEO solely through a salary, ignoring non-salary benefits completely. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 4 warning signs for Siyaram Silk Mills that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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