What We Learned About Bannari Amman Sugars' (NSE:BANARISUG) CEO Compensation

B. Saravanan has been the CEO of Bannari Amman Sugars Limited (NSE:BANARISUG) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Bannari Amman Sugars pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Bannari Amman Sugars

How Does Total Compensation For B. Saravanan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Bannari Amman Sugars Limited has a market capitalization of ₹18b, and reported total annual CEO compensation of ₹28m for the year to March 2020. We note that's a decrease of 13% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹9.0m.

On examining similar-sized companies in the industry with market capitalizations between ₹7.4b and ₹29b, we discovered that the median CEO total compensation of that group was ₹21m. Accordingly, our analysis reveals that Bannari Amman Sugars Limited pays B. Saravanan north of the industry median. Furthermore, B. Saravanan directly owns ₹255m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. In Bannari Amman Sugars' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Bannari Amman Sugars Limited's Growth Numbers

Bannari Amman Sugars Limited has reduced its earnings per share by 7.4% a year over the last three years. It achieved revenue growth of 22% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Bannari Amman Sugars Limited Been A Good Investment?

Given the total shareholder loss of 32% over three years, many shareholders in Bannari Amman Sugars Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, B. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. In contrast, revenue growth for the company has been showing a positive trend. Few would argue that it's wise for the company to pay any more, before returns improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Bannari Amman Sugars (1 shouldn't be ignored!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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