Most Shareholders Will Probably Agree With SJVN Limited's (NSE:SJVN) CEO Compensation

Key Insights

• SJVN will host its Annual General Meeting on 28th of September
• Salary of ₹4.25m is part of CEO Nand Sharma's total remuneration
• The total compensation is 93% less than the average for the industry
• Over the past three years, SJVN's EPS fell by 13% and over the past three years, the total shareholder return was 287%

The performance at SJVN Limited (NSE:SJVN) has been rather lacklustre of late and shareholders may be wondering what CEO Nand Sharma is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 28th of September. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for SJVN

How Does Total Compensation For Nand Sharma Compare With Other Companies In The Industry?

At the time of writing, our data shows that SJVN Limited has a market capitalization of ₹279b, and reported total annual CEO compensation of ₹11m for the year to March 2023. We note that's a decrease of 13% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹4.2m.

On examining similar-sized companies in the Indian Electric Utilities industry with market capitalizations between ₹166b and ₹531b, we discovered that the median CEO total compensation of that group was ₹166m. This suggests that Nand Sharma is paid below the industry median. Furthermore, Nand Sharma directly owns ₹175k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	₹4.2m	₹3.9m	38%
Other	₹7.0m	₹9.1m	62%
Total Compensation	₹11m	₹13m	100%

On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. SJVN pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at SJVN Limited's Growth Numbers

Over the last three years, SJVN Limited has shrunk its earnings per share by 13% per year. Its revenue is down 5.4% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has SJVN Limited Been A Good Investment?

Most shareholders would probably be pleased with SJVN Limited for providing a total return of 287% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

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 these strong returns may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for SJVN (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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. 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.