How Much Does Rama Steel Tubes' (NSE:RAMASTEEL) CEO Make?

The CEO of Rama Steel Tubes Limited (NSE:RAMASTEEL) is Richi Bansal, and this article examines the executive's compensation against the backdrop of overall company performance. 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

How Does Total Compensation For Richi Bansal Compare With Other Companies In The Industry?

According to our data, Rama Steel Tubes Limited has a market capitalization of ₹1.4b, and paid its CEO total annual compensation worth ₹4.2m over the year to March 2020. Notably, that's an increase of 24% over the year before. Notably, the salary which is ₹4.16m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.1m. So it looks like Rama Steel Tubes compensates Richi Bansal in line with the median for the industry. What's more, Richi Bansal holds ₹121m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 99% of total compensation represents salary, while the remainder of 1.1% 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 total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Rama Steel Tubes Limited's Growth Numbers

Over the last three years, Rama Steel Tubes Limited has shrunk its earnings per share by 28% per year. In the last year, its revenue is up 2.8%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. 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 59% over three years, many shareholders in Rama Steel Tubes Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Richi receives almost all of their compensation through a salary. As we touched on above, Rama Steel Tubes Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

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 4 warning signs for Rama Steel Tubes (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Rama Steel Tubes, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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