Here’s Why Shareholders May Want To Be Cautious With Increasing The Ruby Mills Limited’s (NSE:RUBYMILLS) CEO Pay Packet

Performance at The Ruby Mills Limited (NSE:RUBYMILLS) has been reasonably good and CEO Purav Shah has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 23 September 2022. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Ruby Mills

Comparing The Ruby Mills Limited’s CEO Compensation With The Industry

Our data indicates that The Ruby Mills Limited has a market capitalization of ₹11b, and total annual CEO compensation was reported as ₹5.3m for the year to March 2022. We note that’s an increase of 35% above last year. We note that the salary portion, which stands at ₹4.82m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹3.6m. This suggests that Purav Shah is paid more than the median for the industry. Moreover, Purav Shah also holds ₹259m worth of Ruby Mills stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	₹4.8m	₹3.4m	90%
Other	₹527k	₹561k	10%
Total Compensation	₹5.3m	₹4.0m	100%

On an industry level, around 100% of total compensation represents salary and 0.2687% is other remuneration. Our data reveals that Ruby Mills allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.

The Ruby Mills Limited’s Growth

The Ruby Mills Limited has seen its earnings per share (EPS) increase by 45% a year over the past three years. It achieved revenue growth of 67% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has The Ruby Mills Limited Been A Good Investment?

Boasting a total shareholder return of 214% over three years, The Ruby Mills Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude…

Given that the company’s overall performance has been reasonable, the CEO remuneration policy might not be shareholders’ central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Ruby Mills we think you should know about.

Switching gears from Ruby Mills, 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.