How Should Investors Feel About Ponni Sugars (Erode)'s (NSE:PONNIERODE) CEO Remuneration?

N. Ramanathan became the CEO of Ponni Sugars (Erode) Limited (NSE:PONNIERODE) in 2008, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Ponni Sugars (Erode)

How Does Total Compensation For N. Ramanathan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ponni Sugars (Erode) Limited has a market capitalization of ₹1.3b, and reported total annual CEO compensation of ₹14m for the year to March 2020. Notably, that's an increase of 20% over the year before. In particular, the salary of ₹8.06m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.2m. Accordingly, our analysis reveals that Ponni Sugars (Erode) Limited pays N. Ramanathan north of the industry median. What's more, N. Ramanathan holds ₹464k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

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. Ponni Sugars (Erode) pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ponni Sugars (Erode) Limited's Growth

Ponni Sugars (Erode) Limited has seen its earnings per share (EPS) increase by 42% a year over the past three years. Its revenue is down 11% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Ponni Sugars (Erode) Limited Been A Good Investment?

With a three year total loss of 5.1% for the shareholders, Ponni Sugars (Erode) Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Ponni Sugars (Erode) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Ponni Sugars (Erode) that investors should be aware of in a dynamic business environment.

Switching gears from Ponni Sugars (Erode), 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. 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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