What Can We Learn About ISMT's (NSE:ISMTLTD) CEO Compensation?

Baldevraj R. Taneja has been the CEO of ISMT Limited (NSE:ISMTLTD) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for ISMT.

View our latest analysis for ISMT

Comparing ISMT Limited's CEO Compensation With the industry

At the time of writing, our data shows that ISMT Limited has a market capitalization of ₹1.6b, and reported total annual CEO compensation of ₹20m for the year to March 2020. Notably, that's an increase of 8.5% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹20m.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.2m. This suggests that Baldevraj R. Taneja is paid more than the median for the industry. What's more, Baldevraj R. Taneja holds ₹2.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 99% of total compensation represents salary, while the remainder of 1.1% is other remuneration. On a company level, ISMT prefers to reward its CEO through a salary, opting not to pay Baldevraj R. Taneja through non-salary benefits. 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 ISMT Limited's Growth Numbers

ISMT Limited has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is down 30%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 ISMT Limited Been A Good Investment?

Given the total shareholder loss of 25% over three years, many shareholders in ISMT Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

ISMT rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Baldevraj R. is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in ISMT we think you should know about.

Important note: ISMT is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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