Here's Why Pokarna Limited's (NSE:POKARNA) CEO Compensation Is The Least Of Shareholders' Concerns

The share price of Pokarna Limited (NSE:POKARNA) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 06 August 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Pokarna

Comparing Pokarna Limited's CEO Compensation With the industry

Our data indicates that Pokarna Limited has a market capitalization of ₹12b, and total annual CEO compensation was reported as ₹11m for the year to March 2021. We note that's a decrease of 8.1% compared to last year. Notably, the salary of ₹11m is the entirety of the CEO compensation.

On examining similar-sized companies in the industry with market capitalizations between ₹7.4b and ₹30b, we discovered that the median CEO total compensation of that group was ₹15m. From this we gather that Rahul Jain is paid around the median for CEOs in the industry. Furthermore, Rahul Jain directly owns ₹197m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	₹11m	₹12m	100%
Other	-	-	-
Total Compensation	₹11m	₹12m	100%

Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. Speaking on a company level, Pokarna 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 Pokarna Limited's Growth Numbers

Over the last three years, Pokarna Limited has shrunk its earnings per share by 13% per year. Its revenue is down 25% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pokarna Limited Been A Good Investment?

Boasting a total shareholder return of 154% over three years, Pokarna Limited has done well by shareholders. 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...

Pokarna pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. In our study, we found 4 warning signs for Pokarna you should be aware of, and 1 of them is a bit unpleasant.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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