How Should Investors Feel About Genus Paper & Boards' (NSE:GENUSPAPER) CEO Remuneration?

This article will reflect on the compensation paid to Kailash Agarwal who has served as CEO of Genus Paper & Boards Limited (NSE:GENUSPAPER) since 2013. This analysis will also assess whether Genus Paper & Boards pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Genus Paper & Boards

How Does Total Compensation For Kailash Agarwal Compare With Other Companies In The Industry?

According to our data, Genus Paper & Boards Limited has a market capitalization of ₹1.9b, and paid its CEO total annual compensation worth ₹7.3m over the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary of ₹7.3m is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹7.3m. From this we gather that Kailash Agarwal is paid around the median for CEOs in the industry. Moreover, Kailash Agarwal also holds ₹109m worth of Genus Paper & Boards stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Speaking on a company level, Genus Paper & Boards prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Genus Paper & Boards Limited's Growth

Over the last three years, Genus Paper & Boards Limited has shrunk its earnings per share by 46% per year. It saw its revenue drop 33% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Genus Paper & Boards Limited Been A Good Investment?

Given the total shareholder loss of 50% over three years, many shareholders in Genus Paper & Boards Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Genus Paper & Boards pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Genus Paper & Boards pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Genus Paper & Boards (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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