Here's What We Learned About The CEO Pay At Shriram Transport Finance Company Limited (NSE:SRTRANSFIN)

This article will reflect on the compensation paid to Umesh Revankar who has served as CEO of Shriram Transport Finance Company Limited (NSE:SRTRANSFIN) since 2016. This analysis will also assess whether Shriram Transport Finance pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Shriram Transport Finance

How Does Total Compensation For Umesh Revankar Compare With Other Companies In The Industry?

According to our data, Shriram Transport Finance Company Limited has a market capitalization of ₹371b, and paid its CEO total annual compensation worth ₹11m over the year to March 2020. That's a notable increase of 64% on last year. Notably, the salary of ₹11m is the entirety of the CEO compensation.

For comparison, other companies in the same industry with market capitalizations ranging between ₹291b and ₹874b had a median total CEO compensation of ₹11m. From this we gather that Umesh Revankar is paid around the median for CEOs in the industry.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Speaking on a company level, Shriram Transport Finance prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Shriram Transport Finance Company Limited's Growth Numbers

Over the last three years, Shriram Transport Finance Company Limited has shrunk its earnings per share by 10% per year. Its revenue is down 1.8% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Shriram Transport Finance Company Limited Been A Good Investment?

Shriram Transport Finance Company Limited has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Shriram Transport Finance pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Shriram Transport Finance pays its CEO in line with similar-sized companies belonging to the same industry. Shriram Transport Finance has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 5 warning signs for Shriram Transport Finance (1 is potentially serious!) that you should be aware of before investing here.

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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