Here's Why Shareholders Should Examine Shree Rama Newsprint Limited's (NSE:RAMANEWS) CEO Compensation Package More Closely

The results at Shree Rama Newsprint Limited (NSE:RAMANEWS) have been quite disappointing recently and CEO Siddharth Chowdhary bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22 September 2022. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Shree Rama Newsprint

How Does Total Compensation For Siddharth Chowdhary Compare With Other Companies In The Industry?

Our data indicates that Shree Rama Newsprint Limited has a market capitalization of ₹2.5b, and total annual CEO compensation was reported as ₹7.8m for the year to March 2022. We note that's an increase of 53% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth ₹7.8m.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹5.4m. Hence, we can conclude that Siddharth Chowdhary is remunerated higher than the industry median.

Component	2022	2021	Proportion (2022)
Salary	₹7.8m	₹5.1m	100%
Other	-	-	-
Total Compensation	₹7.8m	₹5.1m	100%

Talking in terms of the industry, salary represented approximately 88% of total compensation out of all the companies we analyzed, while other remuneration made up 12% of the pie. On a company level, Shree Rama Newsprint prefers to reward its CEO through a salary, opting not to pay Siddharth Chowdhary through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Shree Rama Newsprint Limited's Growth

Over the last three years, Shree Rama Newsprint Limited has shrunk its earnings per share by 45% per year. It saw its revenue drop 17% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Shree Rama Newsprint Limited Been A Good Investment?

Since shareholders would have lost about 4.4% over three years, some Shree Rama Newsprint Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shree Rama Newsprint pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Shree Rama Newsprint (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Shree Rama Newsprint 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.