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This article will reflect on the compensation paid to Kamal Nath who has served as CEO of Sify Technologies Limited (NASDAQ:SIFY) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Sify Technologies Limited's CEO Compensation With the industry
Our data indicates that Sify Technologies Limited has a market capitalization of US$196m, and total annual CEO compensation was reported as ₹16m for the year to March 2020. That's a modest increase of 7.2% on the prior year. Notably, the salary which is ₹13.2m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations ranging from US$100m to US$400m, the reported median CEO total compensation was ₹70m. That is to say, Kamal Nath is paid under the industry median.
On an industry level, roughly 28% of total compensation represents salary and 72% is other remuneration. Sify Technologies pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Sify Technologies Limited's Growth Numbers
Over the last three years, Sify Technologies Limited has shrunk its earnings per share by 6.4% per year. The trailing twelve months of revenue was pretty much the same as the prior period.
Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Sify Technologies Limited Been A Good Investment?
Given the total shareholder loss of 32% over three years, many shareholders in Sify Technologies Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Kamal is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Sify Technologies that you should be aware of before investing.
Important note: Sify Technologies 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.
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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