Here's Why Shareholders Will Not Be Complaining About Websol Energy System Limited's (NSE:WEBELSOLAR) CEO Pay Packet

It would be hard to discount the role that CEO Sohan Agarwal has played in delivering the impressive results at Websol Energy System Limited (NSE:WEBELSOLAR) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 30 September 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Websol Energy System

Comparing Websol Energy System Limited's CEO Compensation With the industry

Our data indicates that Websol Energy System Limited has a market capitalization of ₹2.3b, and total annual CEO compensation was reported as ₹9.0m for the year to March 2021. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at ₹7.98m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹12m. So it looks like Websol Energy System compensates Sohan Agarwal in line with the median for the industry. Moreover, Sohan Agarwal also holds ₹252m worth of Websol Energy System stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	₹8.0m	₹8.0m	89%
Other	₹1.0m	₹1.0m	11%
Total Compensation	₹9.0m	₹9.0m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Websol Energy System 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.

Websol Energy System Limited's Growth

Websol Energy System Limited's earnings per share (EPS) grew 119% per year over the last three years. It achieved revenue growth of 8.3% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Websol Energy System Limited Been A Good Investment?

We think that the total shareholder return of 81%, over three years, would leave most Websol Energy System Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Websol Energy System that investors should be aware of in a dynamic business environment.

Important note: Websol Energy System is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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