In 2008 N. Ramanathan was appointed CEO of Ponni Sugars (Erode) Limited (NSE:PONNIERODE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does N. Ramanathan’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Ponni Sugars (Erode) Limited has a market cap of ₹1.1b, and is paying total annual CEO compensation of ₹12m. That’s a notable increase of 29% on last year. We looked at a group of companies with market capitalizations under ₹14.7b, and the median CEO compensation was ₹2m.
As you can see, N. Ramanathan is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ponni Sugars (Erode) Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Ponni Sugars (Erode) has changed from year to year.
Is Ponni Sugars (Erode) Limited Growing?
Ponni Sugars (Erode) Limited has increased its earnings per share (EPS) by an average of 9.9% a year, over the last three years Its revenue is down -53% over last year.
I generally like to see a little revenue growth, but the improvement in EPS is good. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. Although we don’t have analyst forecasts, you might want to assess this free data-rich visualization of earnings, revenue and cash flow.
Has Ponni Sugars (Erode) Limited Been A Good Investment?
Given the total loss of 33% over three years, many shareholders in Ponni Sugars (Erode) Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount Ponni Sugars (Erode) Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. This contrasts with the growth in CEO remuneration, in the last year. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. High CEO remuneration is not great, but it certainly doesn’t mean a stock will perform poorly. Nonetheless, it might be wise to check if insiders have been selling.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.