What Can We Conclude About Aries Agro's (NSE:ARIES) CEO Pay?

Rahul Mirchandani has been the CEO of Aries Agro Limited (NSE:ARIES) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Aries Agro.

Check out our latest analysis for Aries Agro

How Does Total Compensation For Rahul Mirchandani Compare With Other Companies In The Industry?

Our data indicates that Aries Agro Limited has a market capitalization of ₹1.1b, and total annual CEO compensation was reported as ₹18m for the year to March 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is ₹16.2m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under ₹15b, the reported median total CEO compensation was ₹7.2m. Hence, we can conclude that Rahul Mirchandani is remunerated higher than the industry median. Furthermore, Rahul Mirchandani directly owns ₹249m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Aries Agro is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Aries Agro Limited's Growth

Aries Agro Limited's earnings per share (EPS) grew 13% per year over the last three years. It achieved revenue growth of 16% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Aries Agro Limited Been A Good Investment?

Given the total shareholder loss of 63% over three years, many shareholders in Aries Agro Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Rahul is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Rahul is underpaid, in fact compensation is definitely on the higher side.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Aries Agro you should be aware of, and 1 of them is potentially serious.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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