How Should Investors Feel About Snowman Logistics' (NSE:SNOWMAN) CEO Remuneration?

Sunil Nair has been the CEO of Snowman Logistics Limited (NSE:SNOWMAN) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Snowman Logistics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Snowman Logistics

How Does Total Compensation For Sunil Nair Compare With Other Companies In The Industry?

According to our data, Snowman Logistics Limited has a market capitalization of ₹11b, and paid its CEO total annual compensation worth ₹12m over the year to March 2020. We note that's an increase of 9.7% above last year. In particular, the salary of ₹11.9m, 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 ₹15b, the reported median total CEO compensation was ₹9.6m. So it looks like Snowman Logistics compensates Sunil Nair in line with the median for the industry.

On an industry level, around 90% of total compensation represents salary and 9.6% is other remuneration. Snowman Logistics pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Snowman Logistics Limited's Growth

Snowman Logistics Limited has reduced its earnings per share by 49% a year over the last three years. Its revenue is down 2.9% over the previous year.

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 Snowman Logistics Limited Been A Good Investment?

Snowman Logistics Limited has generated a total shareholder return of 7.6% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Snowman Logistics pays its CEO a majority of compensation through a salary. As previously discussed, Sunil is compensated close to the median for companies of its size, and which belong to the same industry. Snowman Logistics has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. These figures do not go well against CEO compensation, which is more or less equal to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.

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 2 warning signs for Snowman Logistics you should be aware of, and 1 of them makes us a bit uncomfortable.

Important note: Snowman Logistics 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. 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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