Why We Think Seshasayee Paper and Boards Limited's (NSE:SESHAPAPER) CEO Compensation Is Not Excessive At All

Despite Seshasayee Paper and Boards Limited's (NSE:SESHAPAPER) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24 July 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Seshasayee Paper and Boards

Comparing Seshasayee Paper and Boards Limited's CEO Compensation With the industry

According to our data, Seshasayee Paper and Boards Limited has a market capitalization of ₹13b, and paid its CEO total annual compensation worth ₹21m over the year to March 2021. That's a notable increase of 23% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹6.8m.

For comparison, other companies in the same industry with market capitalizations ranging between ₹7.5b and ₹30b had a median total CEO compensation of ₹21m. So it looks like Seshasayee Paper and Boards compensates Kallidaikurichi Kasi Viswanathan in line with the median for the industry. What's more, Kallidaikurichi Kasi Viswanathan holds ₹630k 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	₹6.8m	₹6.8m	32%
Other	₹14m	₹10m	68%
Total Compensation	₹21m	₹17m	100%

On an industry level, roughly 93% of total compensation represents salary and 7% is other remuneration. In Seshasayee Paper and Boards' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Seshasayee Paper and Boards Limited's Growth Numbers

Over the last three years, Seshasayee Paper and Boards Limited has shrunk its earnings per share by 3.3% per year. It saw its revenue drop 34% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Seshasayee Paper and Boards Limited Been A Good Investment?

Seshasayee Paper and Boards Limited has generated a total shareholder return of 33% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Seshasayee Paper and Boards (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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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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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