Sajjan Jindal became the CEO of JSW Steel Limited (NSE:JSWSTEEL) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for JSW Steel.
How Does Total Compensation For Sajjan Jindal Compare With Other Companies In The Industry?
According to our data, JSW Steel Limited has a market capitalization of ₹577b, and paid its CEO total annual compensation worth ₹400m over the year to March 2020. Notably, that's a decrease of 43% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹118m.
For comparison, other companies in the same industry with market capitalizations ranging between ₹300b and ₹900b had a median total CEO compensation of ₹45m. This suggests that Sajjan Jindal is paid more than the median for the industry. Furthermore, Sajjan Jindal directly owns ₹14m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 99% of total compensation represents salary, while the remainder of 1.1% is other remuneration. It's interesting to note that JSW Steel allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at JSW Steel Limited's Growth Numbers
Over the last three years, JSW Steel Limited has shrunk its earnings per share by 6.9% per year. It saw its revenue drop 23% over the last year.
The decline in earnings is a bit concerning. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has JSW Steel Limited Been A Good Investment?
JSW Steel Limited has generated a total shareholder return of 7.2% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Sajjan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, earnings per share has not been growing sufficiently to impress us, over the last three years. And while shareholder returns have been respectable, they have hardly been superb. So you can understand why we do not think CEO compensation is particularly modest!
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 5 warning signs for JSW Steel (1 is a bit concerning!) that you should be aware of before investing here.
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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