Saturday, September 24, 2022

We Think Liberty Shoes Ltd.’s (NSE:LIBERTSHOE) CEO Compensation Looks Fair

The performance at Liberty Shoes Ltd. (NSE:LIBERTSHOE) has been quite strong recently and CEO Adesh Gupta has played a role in it. Coming up to the next AGM on 30 September 2022, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Liberty Shoes

Comparing Liberty Shoes Ltd.’s CEO Compensation With The Industry

Our data indicates that Liberty Shoes Ltd. has a market capitalization of ₹3.8b, and total annual CEO compensation was reported as ₹4.6m for the year to March 2022. Notably, that’s an increase of 18% over the year before. Notably, the salary of ₹4.6m is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below ₹16b, reported a median total CEO compensation of ₹3.6m. This suggests that Liberty Shoes remunerates its CEO largely in line with the industry average. What’s more, Adesh Gupta holds ₹172m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component 2022 2021 Proportion (2022)
Salary ₹4.6m ₹3.9m 100%
Total Compensation ₹4.6m ₹3.9m 100%

Speaking on an industry level, nearly 100% of total compensation represents salary, while the remainder of 0.0015% is other remuneration. At the company level, Liberty Shoes pays Adesh Gupta solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

NSEI:LIBERTSHOE CEO Compensation September 24th 2022

A Look at Liberty Shoes Ltd.’s Growth Numbers

Liberty Shoes Ltd. has seen its earnings per share (EPS) increase by 16% a year over the past three years. Its revenue is up 9.3% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Liberty Shoes Ltd. Been A Good Investment?

Boasting a total shareholder return of 101% over three years, Liberty Shoes Ltd. 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…

Liberty Shoes pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The company’s solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

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 3 warning signs for Liberty Shoes you should be aware of, and 2 of them are concerning.

Important note: Liberty Shoes 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. 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.

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