How Is Ruchira Papers' (NSE:RUCHIRA) CEO Paid Relative To Peers?

Umesh Garg has been the CEO of Ruchira Papers Limited (NSE:RUCHIRA) since 1983, and this article will examine the executive's compensation 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.

See our latest analysis for Ruchira Papers

How Does Total Compensation For Umesh Garg Compare With Other Companies In The Industry?

Our data indicates that Ruchira Papers Limited has a market capitalization of ₹1.6b, and total annual CEO compensation was reported as ₹23m for the year to March 2020. That is, the compensation was roughly the same as last year. Notably, the salary of ₹23m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹7.6m. This suggests that Umesh Garg is paid more than the median for the industry. Furthermore, Umesh Garg directly owns ₹152m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. On a company level, Ruchira Papers prefers to reward its CEO through a salary, opting not to pay Umesh Garg through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ruchira Papers Limited's Growth

Over the last three years, Ruchira Papers Limited has shrunk its earnings per share by 29% per year. Its revenue is down 25% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Ruchira Papers Limited Been A Good Investment?

With a three year total loss of 68% for the shareholders, Ruchira Papers Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Ruchira Papers rewards its CEO solely through a salary, ignoring non-salary benefits completely. As we touched on above, Ruchira Papers Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Ruchira Papers that investors should look into moving forward.

Switching gears from Ruchira Papers, 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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