We Think Shareholders May Consider Being More Generous With Star Cement Limited's (NSE:STARCEMENT) CEO Compensation Package

Shareholders will be pleased by the robust performance of Star Cement Limited (NSE:STARCEMENT) recently and this will be kept in mind in the upcoming AGM on 30 September 2021. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

Check out our latest analysis for Star Cement

How Does Total Compensation For Sanjay Gupta Compare With Other Companies In The Industry?

Our data indicates that Star Cement Limited has a market capitalization of ₹45b, and total annual CEO compensation was reported as ₹20m for the year to March 2021. That's just a smallish increase of 5.7% on last year. Notably, the salary which is ₹19.0m, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between ₹30b and ₹118b had a median total CEO compensation of ₹56m. In other words, Star Cement pays its CEO lower than the industry median.

Component	2021	2020	Proportion (2021)
Salary	₹19m	₹14m	95%
Other	₹1.1m	₹5.3m	5%
Total Compensation	₹20m	₹19m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. Star Cement pays out 95% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Star Cement Limited's Growth Numbers

Over the last three years, Star Cement Limited has shrunk its earnings per share by 12% per year. Its revenue is up 16% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Star Cement Limited Been A Good Investment?

With a total shareholder return of 4.5% over three years, Star Cement Limited has done okay by shareholders, but there's always room for improvement. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Star Cement that investors should be aware of in a dynamic business environment.

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 decide to trade Star Cement, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all 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.