Stock Analysis

Here's Why It's Unlikely That Zee Entertainment Enterprises Limited's (NSE:ZEEL) CEO Will See A Pay Rise This Year

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The results at Zee Entertainment Enterprises Limited (NSE:ZEEL) have been quite disappointing recently and CEO Punit Goenka bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 14 September 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

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How Does Total Compensation For Punit Goenka Compare With Other Companies In The Industry?

According to our data, Zee Entertainment Enterprises Limited has a market capitalization of ₹171b, and paid its CEO total annual compensation worth ₹132m over the year to March 2021. That's a notable increase of 46% on last year. We note that the salary portion, which stands at ₹122.5m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between ₹73b and ₹234b, we discovered that the median CEO total compensation of that group was ₹74m. This suggests that Punit Goenka is paid more than the median for the industry.

Component20212020Proportion (2021)
Salary ₹123m ₹63m 93%
Other ₹9.2m ₹27m 7%
Total Compensation₹132m ₹90m100%

Talking in terms of the industry, salary represents all of total compensation among the companies we analyzed, while other remuneration is, interestingly, completely ignored. There isn't a significant difference between Zee Entertainment Enterprises and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

NSEI:ZEEL CEO Compensation September 8th 2021

A Look at Zee Entertainment Enterprises Limited's Growth Numbers

Zee Entertainment Enterprises Limited has reduced its earnings per share by 14% a year over the last three years. It achieved revenue growth of 10% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Zee Entertainment Enterprises Limited Been A Good Investment?

Few Zee Entertainment Enterprises Limited shareholders would feel satisfied with the return of -61% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Zee Entertainment Enterprises 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.

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