In This Article:
In 2012 Palem Reddy was appointed CEO of Sonata Software Limited (NSE:SONATSOFTW). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Sonata Software
How Does Palem Reddy's Compensation Compare With Similar Sized Companies?
According to our data, Sonata Software Limited has a market capitalization of ₹33b, and paid its CEO total annual compensation worth ₹46m over the year to March 2019. That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at ₹33m. We examined companies with market caps from ₹14b to ₹57b, and discovered that the median CEO total compensation of that group was ₹25m.
It would therefore appear that Sonata Software Limited pays Palem Reddy more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Sonata Software, below.
Is Sonata Software Limited Growing?
Sonata Software Limited has increased its earnings per share (EPS) by an average of 21% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 26%.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Sonata Software Limited Been A Good Investment?
Most shareholders would probably be pleased with Sonata Software Limited for providing a total return of 121% 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.
In Summary...
We examined the amount Sonata Software Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Sonata Software shares (free trial).