Shareholders May Be More Conservative With Websol Energy System Limited's (NSE:WEBELSOLAR) CEO Compensation For Now

Key Insights

• Websol Energy System to hold its Annual General Meeting on 21st of September
• CEO Sohan Agarwal's total compensation includes salary of ₹13.2m
• The overall pay is 220% above the industry average
• Over the past three years, Websol Energy System's EPS fell by 82% and over the past three years, the total shareholder return was 632%

Websol Energy System Limited (NSE:WEBELSOLAR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 21st of September. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Websol Energy System

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

Our data indicates that Websol Energy System Limited has a market capitalization of ₹6.1b, and total annual CEO compensation was reported as ₹13m for the year to March 2023. That's a slight decrease of 5.8% on the prior year. Notably, the salary of ₹13m is the entirety of the CEO compensation.

For comparison, other companies in the India Semiconductor industry with market capitalizations below ₹17b, reported a median total CEO compensation of ₹4.1m. Accordingly, our analysis reveals that Websol Energy System Limited pays Sohan Agarwal north of the industry median. What's more, Sohan Agarwal holds ₹580m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	₹13m	₹11m	100%
Other	-	₹2.6m	-
Total Compensation	₹13m	₹14m	100%

On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. At the company level, Websol Energy System pays Sohan Agarwal solely through a salary, preferring to go down a conventional route. 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 has reduced its earnings per share by 82% a year over the last three years. It saw its revenue drop 92% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 Websol Energy System Limited Been A Good Investment?

Boasting a total shareholder return of 632% over three years, Websol Energy System Limited has done well by shareholders. 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...

Websol Energy System pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 3 warning signs for Websol Energy System that investors should look into moving forward.

Switching gears from Websol Energy System, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.