Shareholders May Be More Conservative With Mahamaya Steel Industries Limited's (NSE:MAHASTEEL) CEO Compensation For Now

In the past three years, the share price of Mahamaya Steel Industries Limited (NSE:MAHASTEEL) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 30 September 2022. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Mahamaya Steel Industries

Comparing Mahamaya Steel Industries Limited's CEO Compensation With The Industry

According to our data, Mahamaya Steel Industries Limited has a market capitalization of ₹1.2b, and paid its CEO total annual compensation worth ₹7.2m over the year to March 2022. That's a notable increase of 33% on last year. Notably, the salary of ₹7.2m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹3.6m. This suggests that Rajesh Agrawal is paid more than the median for the industry. Moreover, Rajesh Agrawal also holds ₹312m worth of Mahamaya Steel Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹7.2m	₹5.4m	100%
Other	-	-	-
Total Compensation	₹7.2m	₹5.4m	100%

Speaking on an industry level, all of total compensation represents salary, while non-salary remuneration is completely ignored. Speaking on a company level, Mahamaya Steel Industries 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.

Mahamaya Steel Industries Limited's Growth

Mahamaya Steel Industries Limited has seen its earnings per share (EPS) increase by 24% a year over the past three years. It achieved revenue growth of 75% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Mahamaya Steel Industries Limited Been A Good Investment?

With a total shareholder return of -43% over three years, Mahamaya Steel Industries Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Mahamaya Steel Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Mahamaya Steel Industries that investors should think about before committing capital to this stock.

Important note: Mahamaya Steel Industries 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.