It's Unlikely That Avadh Sugar & Energy Limited's (NSE:AVADHSUGAR) CEO Will See A Huge Pay Rise This Year

The share price of Avadh Sugar & Energy Limited (NSE:AVADHSUGAR) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 23 August 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. 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 Avadh Sugar & Energy

Comparing Avadh Sugar & Energy Limited's CEO Compensation With the industry

At the time of writing, our data shows that Avadh Sugar & Energy Limited has a market capitalization of ₹9.0b, and reported total annual CEO compensation of ₹11m for the year to March 2021. That's a notable increase of 18% on last year. We note that the salary portion, which stands at ₹9.86m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹3.0m. This suggests that Devendra Sharma is paid more than the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	₹9.9m	₹8.8m	87%
Other	₹1.5m	₹772k	13%
Total Compensation	₹11m	₹9.6m	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. Avadh Sugar & Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

Avadh Sugar & Energy Limited's Growth

Over the last three years, Avadh Sugar & Energy Limited has shrunk its earnings per share by 1.5% per year. Its revenue is up 4.6% over the last year.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Avadh Sugar & Energy Limited Been A Good Investment?

We think that the total shareholder return of 168%, over three years, would leave most Avadh Sugar & Energy Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Avadh Sugar & Energy (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Avadh Sugar & Energy, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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