Key Things To Understand About Manaksia Steels' (NSE:MANAKSTEEL) CEO Pay Cheque

This article will reflect on the compensation paid to Vineet Agrawal who has served as CEO of Manaksia Steels Limited (NSE:MANAKSTEEL) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Manaksia Steels

How Does Total Compensation For Vineet Agrawal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Manaksia Steels Limited has a market capitalization of ₹662m, and reported total annual CEO compensation of ₹23m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary of ₹23m is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹6.4m. This suggests that Vineet Agrawal is paid more than the median for the industry.

On an industry level, roughly 94% of total compensation represents salary and 6.1% is other remuneration. Speaking on a company level, Manaksia Steels 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.

A Look at Manaksia Steels Limited's Growth Numbers

Over the last three years, Manaksia Steels Limited has shrunk its earnings per share by 7.2% per year. It saw its revenue drop 19% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 Manaksia Steels Limited Been A Good Investment?

With a three year total loss of 75% for the shareholders, Manaksia Steels Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Manaksia Steels rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we noted earlier, Manaksia Steels pays its CEO higher than the norm for similar-sized companies belonging 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. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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 did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Manaksia Steels we think you should know about.

Important note: Manaksia Steels 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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