Here's Why Shareholders Should Examine R S Software (India) Limited's (NSE:RSSOFTWARE) CEO Compensation Package More Closely
The results at R S Software (India) Limited (NSE:RSSOFTWARE) have been quite disappointing recently and CEO Raj Jain bears some responsibility for this. At the upcoming AGM on 10 August 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for R S Software (India)
Comparing R S Software (India) Limited's CEO Compensation With the industry
At the time of writing, our data shows that R S Software (India) Limited has a market capitalization of ā¹914m, and reported total annual CEO compensation of ā¹5.9m for the year to March 2021. This means that the compensation hasn't changed much from last year. In particular, the salary of ā¹5.40m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under ā¹15b, the reported median total CEO compensation was ā¹3.4m. Accordingly, our analysis reveals that R S Software (India) Limited pays Raj Jain north of the industry median. Moreover, Raj Jain also holds ā¹357m worth of R S Software (India) 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 | ā¹5.4m | ā¹5.4m | 91% |
| Other | ā¹533k | ā¹639k | 9% |
| Total Compensation | ā¹5.9m | ā¹6.0m | 100% |
On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Although there is a difference in how total compensation is set, R S Software (India) more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
R S Software (India) Limited's Growth
Over the last three years, R S Software (India) Limited has shrunk its earnings per share by 28% per year. It saw its revenue drop 41% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. 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 R S Software (India) Limited Been A Good Investment?
Given the total shareholder loss of 18% over three years, many shareholders in R S Software (India) Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for R S Software (India) you should be aware of, and 2 of them are significant.
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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About NSEI:RSSOFTWARE
R S Software (India)
Provides software solutions to electronic payment industries in India, the United States, the United Kingdom, and Japan.
Flawless balance sheet with acceptable track record.
