Does JK Paper's (NSE:JKPAPER) CEO Salary Compare Well With Industry Peers?

This article will reflect on the compensation paid to Harsh Singhania who has served as CEO of JK Paper Limited (NSE:JKPAPER) since 2007. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for JK Paper

Comparing JK Paper Limited's CEO Compensation With the industry

At the time of writing, our data shows that JK Paper Limited has a market capitalization of ₹24b, and reported total annual CEO compensation of ₹260m for the year to March 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at ₹74m.

In comparison with other companies in the industry with market capitalizations ranging from ₹15b to ₹58b, the reported median CEO total compensation was ₹16m. This suggests that Harsh Singhania is paid more than the median for the industry. What's more, Harsh Singhania holds ₹64m 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, roughly 89% of total compensation represents salary and 11% is other remuneration. JK Paper sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

JK Paper Limited's Growth

Over the last three years, JK Paper Limited has shrunk its earnings per share by 10% per year. In the last year, its revenue is down 18%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last 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 JK Paper Limited Been A Good Investment?

JK Paper Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Harsh 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 great when you realize that the company has been suffering from negative EPS growth for the last three years. And shareholder returns are decent but not great. So you may want to delve deeper, because we don't think the amount Harsh makes is justifiable.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in JK Paper we think you should know about.

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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