What Does Avanti Feeds' (NSE:AVANTIFEED) CEO Pay Reveal?

Alluri Kumar became the CEO of Avanti Feeds Limited (NSE:AVANTIFEED) in 2002, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Avanti Feeds.

View our latest analysis for Avanti Feeds

Comparing Avanti Feeds Limited's CEO Compensation With the industry

Our data indicates that Avanti Feeds Limited has a market capitalization of ₹67b, and total annual CEO compensation was reported as ₹194m for the year to March 2020. We note that's an increase of 16% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at ₹32m.

On examining similar-sized companies in the industry with market capitalizations between ₹30b and ₹118b, we discovered that the median CEO total compensation of that group was ₹35m. This suggests that Alluri Kumar is paid more than the median for the industry. Moreover, Alluri Kumar also holds ₹8.2b worth of Avanti Feeds stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 100% of total compensation represents salary, while the remainder of 0.1% is other remuneration. In Avanti Feeds' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Avanti Feeds Limited's Growth Numbers

Over the past three years, Avanti Feeds Limited has seen its earnings per share (EPS) grow by 4.5% per year. It achieved revenue growth of 12% over the last year.

We would argue that the modest growth in revenue is a notable positive. And, while modest, the EPS growth is noticeable. So while we'd stop just short of calling this a top performer, but we think it is well worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Avanti Feeds Limited Been A Good Investment?

With a three year total loss of 45% for the shareholders, Avanti Feeds Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Avanti Feeds Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Over the last three years, shareholder returns have been downright disappointing for Avanti Feeds, and although EPS growth is steady, it hasn't set the world on fire. This doesn't look good when you see that Alluri is earning more than the industry median. With such poor returns, we would understand if shareholders had concerns related to the CEO's pay.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Avanti Feeds that you should be aware of before investing.

Important note: Avanti Feeds 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.

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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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