Why Star Paper Mills' (NSE:STARPAPER) CEO Pay Matters

Madhukar Mishra has been the CEO of Star Paper Mills Limited (NSE:STARPAPER) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Star Paper Mills.

See our latest analysis for Star Paper Mills

How Does Total Compensation For Madhukar Mishra Compare With Other Companies In The Industry?

Our data indicates that Star Paper Mills Limited has a market capitalization of ₹1.4b, and total annual CEO compensation was reported as ₹29m for the year to March 2020. Notably, that's an increase of 32% over the year before. In particular, the salary of ₹25.5m, 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 ₹7.8m. Hence, we can conclude that Madhukar Mishra is remunerated higher than the industry median.

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% 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 total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Star Paper Mills Limited's Growth

Over the last three years, Star Paper Mills Limited has shrunk its earnings per share by 27% per year. It saw its revenue drop 25% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Star Paper Mills Limited Been A Good Investment?

Since shareholders would have lost about 55% over three years, some Star Paper Mills Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Star Paper Mills pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 3 warning signs for Star Paper Mills that you should be aware of before investing.

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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