Does Shankara Building Products' (NSE:SHANKARA) CEO Salary Compare Well With Industry Peers?

Siddhartha Mundra became the CEO of Shankara Building Products Limited (NSE:SHANKARA) in 2017, 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 assess whether Shankara Building Products pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Shankara Building Products

Comparing Shankara Building Products Limited's CEO Compensation With the industry

Our data indicates that Shankara Building Products Limited has a market capitalization of ₹10b, and total annual CEO compensation was reported as ₹9.8m for the year to March 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of ₹8.95m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹7.8m. This suggests that Shankara Building Products remunerates its CEO largely in line with the industry average. Furthermore, Siddhartha Mundra directly owns ₹666k worth of shares in the company, implying that they are deeply invested in the company's success.

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 Shankara Building Products and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Shankara Building Products Limited's Growth

Over the last three years, Shankara Building Products Limited has shrunk its earnings per share by 43% per year. In the last year, its revenue is down 23%.

The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shankara Building Products Limited Been A Good Investment?

With a three year total loss of 76% for the shareholders, Shankara Building Products Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Siddhartha is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Shankara Building Products (1 is significant!) that you should be aware of before investing here.

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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