We Think Shareholders May Want To Consider A Review Of CL Educate Limited's (NSE:CLEDUCATE) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at CL Educate Limited (NSE:CLEDUCATE) recently. At the upcoming AGM on 07 September 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for CL Educate

Comparing CL Educate Limited's CEO Compensation With the industry

According to our data, CL Educate Limited has a market capitalization of ₹1.8b, and paid its CEO total annual compensation worth ₹5.4m over the year to March 2021. That's a notable decrease of 37% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹5.4m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹2.0m. Accordingly, our analysis reveals that CL Educate Limited pays Gautam Puri north of the industry median. Furthermore, Gautam Puri directly owns ₹312m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹5.4m	₹8.5m	100%
Other	-	-	-
Total Compensation	₹5.4m	₹8.5m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. At the company level, CL Educate pays Gautam Puri solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

CL Educate Limited's Growth

Over the last three years, CL Educate Limited has shrunk its earnings per share by 78% per year. It saw its revenue drop 30% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 CL Educate Limited Been A Good Investment?

Since shareholders would have lost about 7.4% over three years, some CL Educate Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

CL Educate 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for CL Educate (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: CL Educate is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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