We Discuss Why Sathavahana Ispat Limited's (NSE:SATHAISPAT) CEO Compensation May Be Closely Reviewed

Shareholders will probably not be too impressed with the underwhelming results at Sathavahana Ispat Limited (NSE:SATHAISPAT) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 28 December 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Sathavahana Ispat

How Does Total Compensation For Naresh Adusumilli Compare With Other Companies In The Industry?

At the time of writing, our data shows that Sathavahana Ispat Limited has a market capitalization of ₹163m, and reported total annual CEO compensation of ₹6.0m for the year to March 2021. This was the same amount the CEO received in the prior year. Notably, the salary which is ₹5.89m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹3.4m. This suggests that Naresh Adusumilli is paid more than the median for the industry. What's more, Naresh Adusumilli holds ₹13m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	₹5.9m	₹5.9m	98%
Other	₹113k	₹113k	2%
Total Compensation	₹6.0m	₹6.0m	100%

Speaking on an industry level, nearly 100% of total compensation represents salary, while the remainder of 0.3946% is other remuneration. Investors will find it interesting that Sathavahana Ispat 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 Sathavahana Ispat Limited's Growth Numbers

Sathavahana Ispat Limited has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is down 75%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 Sathavahana Ispat Limited Been A Good Investment?

With a total shareholder return of -64% over three years, Sathavahana Ispat Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Sathavahana Ispat pays its CEO a majority of compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 4 which are significant) in Sathavahana Ispat we think you should know about.

Switching gears from Sathavahana Ispat, 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. 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.