How Should Investors Feel About Steel Exchange India's (NSE:STEELXIND) CEO Remuneration?

Bandi Kumar became the CEO of Steel Exchange India Limited (NSE:STEELXIND) in 2008, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Steel Exchange India

Comparing Steel Exchange India Limited's CEO Compensation With the industry

At the time of writing, our data shows that Steel Exchange India Limited has a market capitalization of ₹3.7b, and reported total annual CEO compensation of ₹6.7m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is ₹6.60m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹4.2m. Hence, we can conclude that Bandi Kumar is remunerated higher than the industry median. Moreover, Bandi Kumar also holds ₹32m worth of Steel Exchange India stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 99% of total compensation represents salary and 1.1% is other remuneration. Steel Exchange India has gone down a largely traditional route, paying Bandi Kumar a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Steel Exchange India Limited's Growth Numbers

Steel Exchange India Limited's earnings per share (EPS) grew 109% per year over the last three years. In the last year, its revenue is down 27%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Steel Exchange India Limited Been A Good Investment?

Boasting a total shareholder return of 39% over three years, Steel Exchange India Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Steel Exchange India pays its CEO a majority of compensation through a salary. As previously discussed, Bandi is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, Steel Exchange India has produced strong EPS growth and shareholder returns over the last three years. So, in acknowledgment of the overall excellent performance, we believe CEO compensation is appropriate. And given most shareholders are probably very happy with recent returns, they might even think that Bandi deserves a raise!

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Steel Exchange India (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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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