Shareholders Will Likely Find MSP Steel & Power Limited's (NSE:MSPL) CEO Compensation Acceptable

Key Insights

• MSP Steel & Power to hold its Annual General Meeting on 12th of September
• CEO Saket Agrawal's total compensation includes salary of ₹3.72m
• Total compensation is 52% below industry average
• Over the past three years, MSP Steel & Power's EPS fell by 7.9% and over the past three years, the total shareholder return was 329%

Performance at MSP Steel & Power Limited (NSE:MSPL) has been rather uninspiring recently and shareholders may be wondering how CEO Saket Agrawal plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 12th of September. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for MSP Steel & Power

Comparing MSP Steel & Power Limited's CEO Compensation With The Industry

At the time of writing, our data shows that MSP Steel & Power Limited has a market capitalization of ₹16b, and reported total annual CEO compensation of ₹6.0m for the year to March 2024. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at ₹3.72m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Indian Metals and Mining industry with market capitalizations ranging from ₹8.4b to ₹34b, the reported median CEO total compensation was ₹12m. This suggests that Saket Agrawal is paid below the industry median. Furthermore, Saket Agrawal directly owns ₹8.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	₹3.7m	₹3.7m	62%
Other	₹2.2m	₹2.2m	38%
Total Compensation	₹6.0m	₹5.9m	100%

Talking in terms of the industry, salary represented approximately 100% of total compensation out of all the companies we analyzed, while other remuneration made up 0.10229686% of the pie. It's interesting to note that MSP Steel & Power allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 MSP Steel & Power Limited's Growth Numbers

Over the last three years, MSP Steel & Power Limited has shrunk its earnings per share by 7.9% per year. In the last year, its revenue is up 15%.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. 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 MSP Steel & Power Limited Been A Good Investment?

Most shareholders would probably be pleased with MSP Steel & Power Limited for providing a total return of 329% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for MSP Steel & Power that investors should look into moving forward.

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. 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.