Increases to CEO Compensation Might Be Put On Hold For Now at Shekhawati Poly-Yarn Limited (NSE:SPYL)

Key Insights

• Shekhawati Poly-Yarn to hold its Annual General Meeting on 15th of September
• Salary of ₹6.32m is part of CEO Mukesh Ruia's total remuneration
• The overall pay is 63% above the industry average
• Shekhawati Poly-Yarn's total shareholder return over the past three years was 67% while its EPS was down 13% over the past three years

Despite strong share price growth of 67% for Shekhawati Poly-Yarn Limited (NSE:SPYL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 15th of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Shekhawati Poly-Yarn

Comparing Shekhawati Poly-Yarn Limited's CEO Compensation With The Industry

Our data indicates that Shekhawati Poly-Yarn Limited has a market capitalization of ₹172m, and total annual CEO compensation was reported as ₹6.3m for the year to March 2023. We note that's an increase of 16% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹6.3m.

In comparison with other companies in the Indian Luxury industry with market capitalizations under ₹17b, the reported median total CEO compensation was ₹3.9m. This suggests that Mukesh Ruia is paid more than the median for the industry. Moreover, Mukesh Ruia also holds ₹56m worth of Shekhawati Poly-Yarn stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	₹6.3m	₹5.5m	100%
Other	-	-	-
Total Compensation	₹6.3m	₹5.5m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. At the company level, Shekhawati Poly-Yarn pays Mukesh Ruia 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.

Shekhawati Poly-Yarn Limited's Growth

Over the last three years, Shekhawati Poly-Yarn Limited has shrunk its earnings per share by 13% per year. It saw its revenue drop 62% 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. 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 Shekhawati Poly-Yarn Limited Been A Good Investment?

We think that the total shareholder return of 67%, over three years, would leave most Shekhawati Poly-Yarn 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...

Shekhawati Poly-Yarn pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for Shekhawati Poly-Yarn that investors should think about before committing capital to this stock.

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. 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.