Here's What We Learned About The CEO Pay At Rama Steel Tubes Limited (NSE:RAMASTEEL)

Richi Bansal is the CEO of Rama Steel Tubes Limited (NSE:RAMASTEEL), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Rama Steel Tubes

Comparing Rama Steel Tubes Limited's CEO Compensation With the industry

Our data indicates that Rama Steel Tubes Limited has a market capitalization of ₹801m, and total annual CEO compensation was reported as ₹4.2m for the year to March 2020. Notably, that's an increase of 24% over the year before. We note that the salary portion, which stands at ₹4.16m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹5.4m. So it looks like Rama Steel Tubes compensates Richi Bansal in line with the median for the industry. Furthermore, Richi Bansal directly owns ₹69m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 95% of total compensation represents salary and 5.5% is other remuneration. Investors will find it interesting that Rama Steel Tubes pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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.

Rama Steel Tubes Limited's Growth

Over the last three years, Rama Steel Tubes Limited has shrunk its earnings per share by 43% per year. It saw its revenue drop 21% over the last 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. 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 Rama Steel Tubes Limited Been A Good Investment?

Given the total shareholder loss of 74% over three years, many shareholders in Rama Steel Tubes Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Rama Steel Tubes pays its CEO a majority of compensation through a salary. As we noted earlier, Rama Steel Tubes pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

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 4 warning signs (and 2 which shouldn't be ignored) in Rama Steel Tubes we think you should know about.

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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