Sajjan Jindal has been the CEO of JSW Steel Limited (NSE:JSWSTEEL) since 2005, 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 JSW Steel.
Comparing JSW Steel Limited's CEO Compensation With the industry
Our data indicates that JSW Steel Limited has a market capitalization of ₹877b, and total annual CEO compensation was reported as ₹400m for the year to March 2020. Notably, that's a decrease of 43% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹118m.
For comparison, other companies in the industry with market capitalizations above ₹590b, reported a median total CEO compensation of ₹32m. This suggests that Sajjan Jindal is paid more than the median for the industry. What's more, Sajjan Jindal holds ₹22m 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, around 96% of total compensation represents salary and 3.9% is other remuneration. JSW Steel sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
JSW Steel Limited's Growth
Over the last three years, JSW Steel Limited has shrunk its earnings per share by 22% per year. In the last year, its revenue is down 16%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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?
We think that the total shareholder return of 50%, over three years, would leave most JSW Steel Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we touched on above, JSW Steel Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. So while we don't think, Sajjan is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 6 warning signs for JSW Steel (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.
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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