Shareholders may be wondering what CEO Umesh Revankar plans to do to improve the less than excellent performance of Shriram Transport Finance Company Limited (NSE: SRTRANSFIN) recently. At the next general meeting on June 24, 2021, they can influence managerial decision-making by voting on resolutions, including executive compensation. Setting appropriate executive compensation to align with shareholder interests can also be a way to influence long-term business performance. We’ve prepared an analysis below to show that CEO compensation seems reasonable.

See our latest review for Shriram Transport Finance

How does Umesh Revankar’s total compensation compare to other companies in the industry?

At the time of writing, our data shows that Shriram Transport Finance Company Limited has a market capitalization of 377 billion yen and reported total annual CEO compensation of 9.7 million yen for the year through March 2021. This is notably a decrease of 12% compared to the year before. It should be noted that the CEO’s compensation consists entirely of salary, worth 9.7 million yen.

For comparison, other companies in the same industry with market caps between 293 billion yen and 880 billion yen had a median total CEO compensation of 154 million yen. That is, Umesh Revankar is paid below the industry median.

At the industry level, it’s fascinating to see that all total compensation represents salary and non-salary benefits are not factored into the equation at all. Speaking at the corporate level, Shriram Transport Finance prefers to follow a traditional route, paying all compensation through a salary. If salary dominates total compensation, this suggests that CEO compensation leans less towards the variable portion, which is generally performance-related.

Growth of Shriram Transport Finance Company Limited

Over the past three years, Shriram Transport Finance Company Limited has reduced its earnings per share by 3.3% per year. The last twelve months of income were roughly the same as the previous period.

Overall, this is not a very positive result for shareholders. And flat income is seriously uninteresting. These factors suggest that the performance of the company would not really justify a high salary for the CEO. Stepping away from the current shape for a second, it might be important to check out this free visual representation of what analysts expect for the future.

Was the Shriram Transport Finance Company Limited a good investment?

Shriram Transport Finance Company Limited generated a total shareholder return of 1.2% over three years, so most shareholders wouldn’t be too disappointed. Although there is always room to improve. As a result, a proposal to increase CEO compensation without seeing improved shareholder returns might not be welcomed by most shareholders.

In summary…

Shriram Transport Finance rewards its CEO only through a salary, completely ignoring non-salary benefits. While it’s true that shareholders have delivered decent returns, it’s hard to ignore the lack of earnings growth and it makes us wonder if the current returns can continue. Shareholders might want to question the board of directors on these concerns and revisit their investment thesis for the company.

It is always advisable to analyze the CEO’s compensation, as well as perform an in-depth analysis of the key performance areas of the company. That’s why we did our research and identified 4 warning signs for Shriram Transport Finance (1 of which cannot be ignored!) that you need to know in order to have a holistic understanding of the stock.

Arguably, the quality of the company is much more important than the compensation levels of CEOs. So look at this free list of interesting companies that have a HIGH return on equity and low leverage.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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