We Discuss Why Swan Energy Limited's (NSE:SWANENERGY) CEO May Deserve A Higher Pay Packet

Key Insights

• Swan Energy to hold its Annual General Meeting on 28th of September
• Total pay for CEO Nikhil Merchant includes ₹13.7m salary
• The overall pay is 68% below the industry average
• Over the past three years, Swan Energy's EPS fell by 6.2% and over the past three years, the total shareholder return was 158%

The decent performance at Swan Energy Limited (NSE:SWANENERGY) recently will please most shareholders as they go into the AGM coming up on 28th of September. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

View our latest analysis for Swan Energy

How Does Total Compensation For Nikhil Merchant Compare With Other Companies In The Industry?

Our data indicates that Swan Energy Limited has a market capitalization of ₹78b, and total annual CEO compensation was reported as ₹14m for the year to March 2023. Notably, that's an increase of 20% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹14m.

On comparing similar companies from the Indian Luxury industry with market caps ranging from ₹33b to ₹133b, we found that the median CEO total compensation was ₹42m. This suggests that Nikhil Merchant is paid below the industry median. Moreover, Nikhil Merchant also holds ₹1.2m worth of Swan Energy 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	₹14m	₹11m	100%
Other	-	-	-
Total Compensation	₹14m	₹11m	100%

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, Swan Energy pays Nikhil Merchant solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Swan Energy Limited's Growth

Over the last three years, Swan Energy Limited has shrunk its earnings per share by 6.2% per year. In the last year, its revenue is up 183%.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Swan Energy Limited Been A Good Investment?

We think that the total shareholder return of 158%, over three years, would leave most Swan Energy Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Swan Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Swan Energy that investors should look into moving forward.

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.