Here's What We Learned About The CEO Pay At Star Paper Mills Limited (NSE:STARPAPER)

This article will reflect on the compensation paid to Madhukar Mishra who has served as CEO of Star Paper Mills Limited (NSE:STARPAPER) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Star Paper Mills

Comparing Star Paper Mills Limited's CEO Compensation With the industry

According to our data, Star Paper Mills Limited has a market capitalization of ₹1.7b, and paid its CEO total annual compensation worth ₹29m over the year to March 2020. Notably, that's an increase of 32% over the year before. Notably, the salary which is ₹25.5m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below ₹15b, reported a median total CEO compensation of ₹7.3m. Accordingly, our analysis reveals that Star Paper Mills Limited pays Madhukar Mishra north of the industry median.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Star Paper Mills is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Star Paper Mills Limited's Growth

Star Paper Mills Limited has reduced its earnings per share by 32% a year over the last three years. It saw its revenue drop 26% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Star Paper Mills Limited Been A Good Investment?

Given the total shareholder loss of 54% over three years, many shareholders in Star Paper Mills Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Star Paper Mills pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 4 warning signs for Star Paper Mills 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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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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