Here's Why Shareholders May Want To Be Cautious With Increasing Savita Oil Technologies Limited's (NSE:SOTL) CEO Pay Packet

CEO Gautam Mehra has done a decent job of delivering relatively good performance at Savita Oil Technologies Limited (NSE:SOTL) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29 September 2021. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Savita Oil Technologies

How Does Total Compensation For Gautam Mehra Compare With Other Companies In The Industry?

Our data indicates that Savita Oil Technologies Limited has a market capitalization of ₹22b, and total annual CEO compensation was reported as ₹52m for the year to March 2021. We note that's an increase of 52% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at ₹8.9m.

On examining similar-sized companies in the industry with market capitalizations between ₹15b and ₹59b, we discovered that the median CEO total compensation of that group was ₹27m. Accordingly, our analysis reveals that Savita Oil Technologies Limited pays Gautam Mehra north of the industry median. What's more, Gautam Mehra holds ₹14b 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	₹8.9m	₹8.1m	17%
Other	₹44m	₹26m	83%
Total Compensation	₹52m	₹34m	100%

Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. It's interesting to note that Savita Oil Technologies allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Savita Oil Technologies Limited's Growth Numbers

Savita Oil Technologies Limited has seen its earnings per share (EPS) increase by 35% a year over the past three years. It achieved revenue growth of 27% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Savita Oil Technologies Limited Been A Good Investment?

Boasting a total shareholder return of 62% over three years, Savita Oil Technologies Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Savita Oil Technologies that investors should think about before committing capital to this 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.

If you’re looking to trade Savita Oil Technologies, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.