What Can We Learn About Sathavahana Ispat's (NSE:SATHAISPAT) CEO Compensation?

This article will reflect on the compensation paid to Naresh Adusumilli who has served as CEO of Sathavahana Ispat Limited (NSE:SATHAISPAT) since 2009. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Sathavahana Ispat.

Check out our latest analysis for Sathavahana Ispat

Comparing Sathavahana Ispat Limited's CEO Compensation With the industry

Our data indicates that Sathavahana Ispat Limited has a market capitalization of ₹113m, and total annual CEO compensation was reported as ₹6.0m for the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of ₹5.89m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹4.3m. This suggests that Naresh Adusumilli is paid more than the median for the industry. Furthermore, Naresh Adusumilli directly owns ₹10m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 98% of total compensation represents salary and 2.3% is other remuneration. Sathavahana Ispat pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

A Look at Sathavahana Ispat Limited's Growth Numbers

Sathavahana Ispat Limited has reduced its earnings per share by 6.1% a year over the last three years. In the last year, its revenue is down 77%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Sathavahana Ispat Limited Been A Good Investment?

Since shareholders would have lost about 91% over three years, some Sathavahana Ispat Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Naresh receives almost all of their compensation through a salary. As previously discussed, Naresh is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Sathavahana Ispat that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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