The share price of Magadh Sugar & Energy Limited (NSE:MAGADSUGAR) 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. Some of these issues will occupy shareholders' minds as the AGM rolls around on 24 August 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For Chandra Mohan Compare With Other Companies In The Industry?
According to our data, Magadh Sugar & Energy Limited has a market capitalization of ₹4.1b, and paid its CEO total annual compensation worth ₹11m over the year to March 2021. We note that's an increase of 16% above last year. We note that the salary portion, which stands at ₹10.6m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹3.0m. This suggests that Chandra Mohan is paid more than the median for the industry.
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. Our data reveals that Magadh Sugar & Energy allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Magadh Sugar & Energy Limited's Growth Numbers
Over the last three years, Magadh Sugar & Energy Limited has shrunk its earnings per share by 17% per year. It achieved revenue growth of 9.0% over the last year.
The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. 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 Magadh Sugar & Energy Limited Been A Good Investment?
We think that the total shareholder return of 459%, over three years, would leave most Magadh 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.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. 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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 1 which is a bit concerning) in Magadh Sugar & Energy we think you should know about.
Switching gears from Magadh 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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