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

This article will reflect on the compensation paid to N. Ramanathan who has served as CEO of Ponni Sugars (Erode) Limited (NSE:PONNIERODE) since 2008. This analysis will also assess whether Ponni Sugars (Erode) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Ponni Sugars (Erode)

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

Our data indicates that Ponni Sugars (Erode) Limited has a market capitalization of ₹1.2b, and total annual CEO compensation was reported as ₹14m for the year to March 2020. We note that's an increase of 20% above last year. 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 ₹3.4m. This suggests that N. Ramanathan is paid more than the median for the industry. What's more, N. Ramanathan holds ₹426k 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) sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ponni Sugars (Erode) Limited's Growth

Ponni Sugars (Erode) Limited has seen its earnings per share (EPS) increase by 86% a year over the past three years. It saw its revenue drop 22% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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?

Given the total shareholder loss of 12% over three years, many shareholders in Ponni Sugars (Erode) Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, N. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say N. is underpaid, in fact compensation is definitely on the higher side.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Ponni Sugars (Erode) that investors should look into moving forward.

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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