Key Things To Understand About Websol Energy System's (NSE:WEBELSOLAR) CEO Pay Cheque

Sohan Agarwal is the CEO of Websol Energy System Limited (NSE:WEBELSOLAR), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Websol Energy System pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Websol Energy System

How Does Total Compensation For Sohan Agarwal Compare With Other Companies In The Industry?

At the time of writing, our data shows that Websol Energy System Limited has a market capitalization of ₹1.5b, and reported total annual CEO compensation of ₹9.0m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of ₹7.98m, 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 ₹2.4m. Accordingly, our analysis reveals that Websol Energy System Limited pays Sohan Agarwal north of the industry median. Moreover, Sohan Agarwal also holds ₹117m 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.

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 5.7% of the pie. There isn't a significant difference between Websol Energy System 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.

A Look at Websol Energy System Limited's Growth Numbers

Over the last three years, Websol Energy System Limited has shrunk its earnings per share by 53% per year. Its revenue is down 38% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Websol Energy System Limited Been A Good Investment?

Since shareholders would have lost about 65% over three years, some Websol Energy System Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Sohan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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 4 warning signs for Websol Energy System that you should be aware of before investing.

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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