What Can We Learn About Aro Granite Industries' (NSE:AROGRANITE) CEO Compensation?

Sunil Arora is the CEO of Aro Granite Industries Limited (NSE:AROGRANITE), and in this article, we analyze the executive's compensation package 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 Aro Granite Industries.

See our latest analysis for Aro Granite Industries

Comparing Aro Granite Industries Limited's CEO Compensation With the industry

Our data indicates that Aro Granite Industries Limited has a market capitalization of ₹412m, and total annual CEO compensation was reported as ₹16m for the year to March 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at ₹16.2m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below ₹15b, we found that the median total CEO compensation was ₹5.2m. Hence, we can conclude that Sunil Arora is remunerated higher than the industry median. What's more, Sunil Arora holds ₹134m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Investors will find it interesting that Aro Granite Industries pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Aro Granite Industries Limited's Growth

Over the last three years, Aro Granite Industries Limited has shrunk its earnings per share by 44% per year. In the last year, its revenue is down 9.1%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Aro Granite Industries Limited Been A Good Investment?

Since shareholders would have lost about 59% over three years, some Aro Granite Industries Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Aro Granite Industries pays its CEO a majority of compensation through a salary. As we noted earlier, Aro Granite Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

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 4 warning signs for Aro Granite Industries you should be aware of, and 3 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

If you decide to trade Aro Granite Industries, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.